Norfolk Southern to purchase assets of Cincinnati Southern Railway
Norfolk Southern (NSC) announced the execution of a purchase agreement under which the company’s operating subsidiary, Norfolk Southern Railway Company, will acquire substantially all of the assets of the Cincinnati Southern Railway, an approximately 337 mile railroad that runs from Cincinnati, Ohio to Chattanooga, Tennessee.
The CSR is currently owned by the City of Cincinnati and operated by the Cincinnati, New Orleans and Texas Pacific Railway Company, a wholly owned subsidiary of Norfolk Southern Railway, under a lease agreement expiring in 2026.
The agreement provides the company ownership of approximately 9,500 acres of land that sits under infrastructure maintained and operated by Norfolk Southern.
Further, it ensures Norfolk Southern will own the line in perpetuity, while eliminating uncertainty around future lease costs.
The line is one of the highest density segments of the company’s network, with as many as 30 trains a day traveling the route.
Upon the close of the transaction, projected to occur in the first half of 2024, the City of Cincinnati will receive cash consideration of approximately $1.62B.
Norfolk Southern intends to finance the transaction through a combination of internal and external sources.
The City of Cincinnati plans to use the proceeds of the transaction to form an infrastructure fund that will benefit the citizens of Cincinnati for generations to come.
The trust would solely fund the rehabilitation, modernization, or replacement of existing infrastructure such as streets, bridges, municipal buildings, parks, and green space.
The closing is subject to certain conditions, including approval by the voters of Cincinnati and the U.S. Surface Transportation Board.
To read timely stories similar to this, along with money making trade ideas, sign up for a membership to Stockwinners.
This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.