Friday, July 13, 2012

Iron Horse Update- At Least 26 Killed in South Africa Rail Crossing Collision; Norfolk Southern Derailment Causes Firey Blast in Ohio; Patriot Rail Purchased by Steel River; Rivals Set to Bid on Rail America?

SOUTH AFRICA- A truck shuttling farm workers to and from orchards was struck by a coal train at a grade crossing near the village of Hectorspruit in eastern South Africa on Friday, killing at least 26 and leaving another 25 seriously injured.

Although the crossing was clearly marked and witnesses said the train blew its horn, the driver went ahead and attempted to cut ahead of the train. The truck driver was treated for his injuries before being taken into custody by police.

The truck was reportedly dragged a half mile before the train was able to come to a stop. Some of the bodies were horribly mangled in the collision, complicating police attempts to notify the victim's next-of-kin. It is believed that a number of the dead and injured are from Mozambique.

South Africa's state-run transportation and logistics company TransNet said the coal train was bound for the Mozambique border at Komatipoort when the collision occured. The deadly accident took place 30km east of the border at Mozambique and about 120 km south of South Africa's famed Krueger National Park.
A trio of newly rebuilt Tennessee Southern GP9s emerge from the morning mist in Columbia, TN in Patriot Rail colors in September 2007. Casey Thomason photo

PATRIOT RAIL- Boca Raton, FL-based shortline operator Patriot Rail has agreed to terms with San Francisco-based Steel River Infrastructure Partners to acquire 100% of Patriot Rail's assets in early May.

Patriot Rail operates nearly a dozen railways and contract switching operations in 13 states. They expanded considerably in 2010 when they purchased railroads previously operated by Weyerhauser Co [NYSE- WY]- including the Columbia and Cowlitz in Washington state, the Texas, Oklahoma & Eastern in Arkansas and Oklahoma and the Golden Triangle Railroad in Mississippi. In 2011, the North Carolina Department of Transportation awarded Patriot Rail a contract to operate freight service over a dormant 15-mile former Seaboard Coast Line branch that's being set aside for possible future use as part of a dedicated high speed rail corridor between Virginia and the Research Triangle area in North Carolina.

Prior to the Patriot Rail acquisition, Steel River Infrastructure Partners holdings included transmission lines in the San Francisco Bay area, natural gas facilities along the Marcellus Shale and diversified port holdings in New Orleans, Mobile, AL and Jacksonville, FL.

OHIO- A massive blaze in Ohio's capital city has burned itself out after a Norfolk Southern freight train carrying tank cars loaded with ethanol derailed on Wednesday, triggering a massive fire and series of explosions near the Ohio State campus.

The derailment and fires prompted a temporary evacuation order of the area, but most residents were able to return later Wednesday. There were no reports of any fatalities, although two onlookers suffered minor injuries when they were walking along the side of the tracks to get a closer look.

According to the NTSB, a total of sixteen cars from the Chicago, IL to Linwood, NC freight train derailed. The three ethanol tankers that burned and then exploded were carrying 30,000 gallons each.

Also among the NTSB's early findings was that the track was fairly well maintained- usually undergoing inspection twice a week- and that the train was going below the speed limit at the time of the derailment. The crew, who were unhurt, also didn't notice anything out of the ordinary.

Firefighters had [rather wisely, I might add- NANESB!] decided to let the ethanol burn itslf out rather than douse the derailed ethanol tankers with a foam and flame retardant.

Sporting colors and lettering for parent company Rail America, Otter Tail Valley GP18 #192 is seen charging towards Moorhead, MN in September 2009. John Ryan photo

RAIL AMERICA- Reuters is reporting that Fortress Investment Group [NYSE- FIG] has hired Deutsche Bank to weigh a divestment of their holdings in shortline and regional railroad operator Rail America.

A number of interested parties have reportedly submitted their initial bids for Rail America, Inc [NYSE- RA] last month and the bidding has advanced to the second round.

Among the potential Rail America suitors are an unnamed Canadian pension fund and two competing shortline and regional operators; privately-held WATCO based out of Pittsburgh, KS and Genesee & Wyoming [NYSE- GWR].

Prior to their 2011 acquisitons of the independently-run Marquette Rail in Michigan and the Wellboro & Corning in northern Pennsylvania, Rail America operated 43 different shortline and regional railroads throughout the USA and Canada, including two in New England. Should Fortress sell off their majority stake in Rail America, this could be the largest rail transaction in the nation since Warren Buffet's Bershire Hathaway [NYSE- BRK-A; BRK-B] acquired the Burlington Northern Santa Fe in 2009.

Shares in Rail America- which had been steadily rising in value since August 2011- took off dramatically in February and closed at an all-time high of $26.22 per share on Friday.

Fortress still remains a majority stakeholder in the 350 mile Florida East Coast railroad, which is not included in any transaction involving Rail America.

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