RII can perform an array of services to assist with preparing your railroad portfolio for sale or performing due diligence for major acquisitions
Projects
Acquisition of Patriot Rail
RII performed the due diligence for acquisition of Patriot Rail, a system including 11 short line railroads by Steel River Infrastructure in 2012. Services included detailed inspection of all equipment and track assets, estimating expected rehabilitation costing where relevant, examining all traffic and operating plans, agreements and developing operational feasibility. Financial analysis included projecting revenues and profitability on each line as well as the purchase as a whole, including capital costs and ongoing maintenance and expenses. RII performed the due diligence on Patriot Rail again in 2019 when Steel River sold its assets to First State Investments and Royal Bank of Canada. RII analyzed 12 short line railroads with 585 miles of track and 6 rail served facilities, including costing expenses for all 18 facilities and revenue projections for 30 years. The services included inspection of a major sample of all railroad's locomotives and railcar fleet, as well as the largest 4 railroads for track, structures and maintenance/capital projections. RII modeled all operation expenses and revenues and incorporated into Bank of Canada's proprietary model sell side, investment side and risk scenarios. Revenue projections included market research and forecasting on all major commodities moved for each railroad, incorporating industry growth factors, rate escalation and ancillary services.
Pan Am Railways Transaction
RII served as the rail expert for Antim Infrastructure Partners performing due diligence on this offering of Pan Am Railways in 2020. The system included 1,800 miles of Class II track and handled 90,000 annual freight carloads. RII developed the operating costs and projected revenues for the next 20 years based in commodity forecasted growth, rate escalation and inflation factors. The advised on the legacy agreements from 5 previous railroad and ongoing joint agreements with CSX, NS and Pan Am railroads, 5 different labor contracts governing union labor and traffic diversion potential with CSX and NS. The project also involved vetting the revenue potential of prospective opportunities identified by Pan Am and advising on the difference between U.S. and European railroad operations, capital costs and revenues.
Lake States Railway Transaction
RII performed the due diligence for CIM Group's bid for the Lake States Railway, a Class II railroad with 375 miles of track in 8 subdivisions handling 54,000 carloads annually. Work involved developing the profitability of each subdivision by developing the individual operating costs for each subdivision, the revenue and projected revenue based on the commodities. A major component was vetting the prospective business presented by the seller by estimating the capital costs to realize the traffic and the likelihood and timeline of the traffic coming on line, which greatly affected the revenues so CIM could make a realistic bid. Also examined in detail were market share for rail by competing modes analysis comparison, especially in Michigan where heavy load trucks are allowed.
Canadian Pacific/Kansas City Southern Merger
RII was tasked by a coalition of cities along the route west of the Chicago area to challenge the CPKC merger in 2021 and analyze traffic affects and diversions as a result of the merger. Work involved advising on existing traffic flows, diversions and projected traffic volumes and impacts to crossings, noise and safety, as well as advising on terms for the merger agreement in favor of protecting the cities in the area. RII's analysis, opinions and Verified Statement as an expert were presented to the US Surface Transportation Board for consideration in its decisions regarding the merger, terms, covenants and restrictions which was approved in 2022.
