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Railroad company proposes to sell 80 percent stake

2014-04-28T19:00:00Z 2014-05-02T12:20:22Z Railroad company proposes to sell 80 percent stake Glens Falls Post-Star

Eighty percent of the parent company of Saratoga & North Creek Railway is being sold to a Midwestern corporation, and local officials are trying to figure out what that means for the local railroad.

Iowa Pacific Holdings LLC has agreed to sell an 80 percent interest in the company to Illinois-based entities known as Chai Trust Co. LLC and EGI Fund Investors LLC, according to federal filings.

No purchase price was released. Iowa Pacific’s “senior management” will retain the remaining 20 percent of the company, according to the federal notice.

“Chai-EGI states that the purpose of this transaction is to improve the revenue base of the railroads controlled by IPH (Iowa Pacific Holdings) through access to Chai-EGI’s resources,” a notice posted by the U.S. Surface Transportation Board states.

Warren County Administrator Paul Dusek and numerous county supervisors said Monday they were not aware of the proposed sale until advised of it Monday by Johnsburg Supervisor Ron Vanselow. Vanselow said a local resident told him about the sale.

Warrensburg Supervisor Kevin Geraghty, chairman of the county Board of Supervisors, said county officials were reaching out to Iowa Pacific staff to discuss the issue, but had not spoken with the company as of late Monday afternoon.

Iowa Pacific owns the railroad that operates passenger trains between North Creek and Saratoga Springs and freight trains between Tahawus and Saratoga Springs.

Warren County and the town of Corinth own the train line itself.

Iowa Pacific owns 10 railroads around the country, most of them in the Midwest and Southwest.

The possible sale was made public Wednesday through a filing made with the U.S. Surface Transportation Board. It was published on the federal agency’s website.

Iowa Pacific President Ed Ellis could not be reached for comment Monday, but said later in the week that the company's management and mission will stay the same if the sale takes place. There will be no effect on SNCRR's management, he added.

He said the company is simply "adding investors" to improve cash flow for investment into operations.

Ellis said he could not discuss the amount of money involved in the transaction.

SNCRR has had trouble paying its local bills promptly, including its payments to Warren County.

Vanselow said the sale could be good news if it infused the company with cash, as the sale notice seems to indicate.

“It may improve their cash flow considerably,” he said.

The railway has been criticized for a lack of communication with local officials, and Vanselow said he hopes that will improve.

Copyright 2016 Glens Falls Post-Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(14) Comments

  1. tedsunday
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    tedsunday - May 01, 2014 7:15 am
    Pantera do you people do any research? He BANKRUPTED the Chicago Tribune. http://www.thewire.com/business/2011/06/more-ways-sam-zell-destroyed-tribune-company/38997/ He is noted for buying failed companys and selling off their assets. That's why Forbes says "he dances on the graves of failed companys"
  2. Pantera
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    Pantera - April 30, 2014 2:37 pm
    EGI, the private equity firm who bought a majority stake in Iowa Pacific, is Equity Group Investments. It is owned by Sam Zell the Chicago Billionaire who bought the Chicago Tribune. This is a positive not a negative
  3. bilp36
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    bilp36 - April 30, 2014 12:01 pm
    AGAIN, what a boondoggle, for the county to spend a dime on a project that does not benefit local folks. i have commented 3 times regarding this issue,get out of this rail business.
  4. tedsunday
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    tedsunday - April 30, 2014 10:25 am
    Goldengirl, if you followed the story at all, you would have notice this link from the Post Star. The hand writing was on the wall they over stretched and this is what happens. http://www.santacruzsentinel.com/ci_23790454/rails-debt-parent-company-local-train-operator-struggles
  5. goldengriff20
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    goldengriff20 - April 29, 2014 10:45 pm
    Apparently tedsunday doesn't speak business either. Unless he has access to the railroad's financials, he is purely speculating on the out come. People really need to do their homework before posting a comment like that. Let's wait and see how this shakes out before you kill off and bury the railroad. Why certain posters want this business to fail is just being short sighted.
  6. tedsunday
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    tedsunday - April 29, 2014 3:54 pm
    Homeboy62 apparently you don't understand business speak. "Chai-EGI states that the purpose of this transaction is to improve the revenue base of the railroads controlled" This means the current revenue is insufficient to maintain current operations. "access to Chai-EGI's resources and to achieve economies of scale through greater centralization of administrative functions." Means they will now layoff most of the staff. The economy of scale is that the operational equipment that is being used on money losing operations like SNC will be moved or sold. " Furthermore, Chai-EGI states that it plans to provide or secure access to sources of capital that will, in turn, promote growth among IPH's railroads." Chai will sell off anything of value to capitalize the handful of operations that make money.
  7. Homeboy62
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    Homeboy62 - April 29, 2014 12:28 pm
    Chai-EGI states that the purpose of this transaction is to improve the revenue base of the railroads controlled by IPH through access to Chai-EGI's resources and to achieve economies of scale through greater centralization of administrative functions. Furthermore, Chai-EGI states that it plans to provide or secure access to sources of capital that will, in turn, promote growth among IPH's railroads.
  8. murph1
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    murph1 - April 29, 2014 10:38 am
    OK we tried the train and it didn't work. Now let's try what we know will work...rip up the tracks and make a trail for bikes and snowmobiles. A much wiser investment
  9. robzzyzx
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    robzzyzx - April 29, 2014 8:50 am
    What is Warren County's investment in the train to North Creek so far? And how many people ride this (see above), and what is the proposed return on investment? Um, only in Warren County does this type of math add up (see trash plant, co-gen plant, WC Jail, etc.)
  10. DavidSperry
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    DavidSperry - April 29, 2014 7:30 am
    Take the railroad people out of running the railroad and there goes the show.wrenchone@roadrunner.com
  11. ADK1966
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    ADK1966 - April 29, 2014 7:13 am
    Running the trains was a dumb idea
    There has been nothing but problems
    Rip up the tracks and let the ATV’s Bicyclists and Snowmobiles use it on a yearly permit bases.
    The counties will generate more revenue that way with fewer problems
  12. nytoaz9382
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    nytoaz9382 - April 29, 2014 12:29 am
    Wasn't there just an article yesterday about remodeling the Haley station back to what it was in the early 1900's? Thinking the county should rethink this plan until further notice... The railway would be more profitable ifthey didnt run trains so often. Living right next to the tracks I know many of the trains heading both north and south Have no more then 20 people tops on each trip ...
  13. DanaHaff
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    DanaHaff - April 28, 2014 9:57 pm
    The Chinese are coming! The Chinese are coming!
  14. tedsunday
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    tedsunday - April 28, 2014 7:28 pm
    More than likely this will be the end of the line for this operation. The Tahawus mine deal is over to many different railroads to make it profitable. The tourist operation is marginal at best. This was more than likely a sale to avoid bankruptcy. The new company will eliminate it's low revenue producing operations.

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