Short Line railroad cars

Transaction Support & Due Diligence/Refinancing

The deregulation of the rail industry in the 1980s led to a surge in Class I branch line sales, resulting in a vibrant short line transaction market that continues today. With decades of experience assisting Short Line transactions nationwide, RLBA provides expert assistance in all aspects of Short Line transactions and acquisitions. RLBA has the experience and knowledge necessary to provide negotiation assistance and investment-quality due diligence on the operational, economic, and financial components of any Short Line transaction.

Select Project Descriptions:

CANADIAN PACIFIC RAILWAY:

RLBA staff performed a study to assist potential buyers in understanding the future staffing, costs and operations of 660 miles constituting the west end of the DME Railroad to be spun off by Canadian Pacific (CP). Areas of study included:

  1. estimating the infrastructure capital and maintenance costs over the next decade necessary to keep the railroad in a steady state condition;
  2. ascertaining the number of employees needed to maintain the physical plant, rolling stock and motive power of the new railroad;
  3. estimating the number of locomotives necessary to haul traffic on the west end if operated as an independent short line;
  4. analyzing and forecasting trends in traffic, particularly volatile grain volumes; and
  5. providing opinions on changes to make the operation more efficient if operated as an independent railroad. RLBA undertook an on-site inspection of nearly the entire DM&E west end, developed and analyzed a railroad operating plan including train size and routing, and developed available historical data concerning grain flows.

The final deliverable to CP, an investment-quality written report, was provided to qualified buyers.

LEVINE LEICHTMAN CAPITAL PARTNERS:

RLBA was engaged to perform due diligence associated with the acquisition of Regional Rail, LLC, a short line holding company whose portfolio included four railroads in the Mid-Atlantic region and a national grade crossing signal installation company known as Diamondback Signal. RLBA performed a series of detailed analyses associated with its due diligence including:

  1. market research of grant funding available in New York and Pennsylvania, including historical funding levels and anticipated future funding availability and the percentage of funding received by the railroad companies;
  2. a detailed review of existing and potential federal regulations that impact short line railroads and signal repair companies including future funding of Section 130 grade crossing funds; and
  3. a market analysis of the grade crossing signal maintenance company including current market penetration, anticipated areas of growth, competitive analysis and quality of services provided.

As part of its work, RLBA produced three investment-grade reports outlining the aforementioned areas of research, each of which was forwarded to investment partners to assist in finalizing the acquisition of the company. On August 25, 2015, it was announced that Levine Leichtman Capital Partners had acquired Regional Rail and its subsidiary businesses.