The Utah Railway Co., operating track between Ogden and Grand Junction, Colo., will be sold by Tennessee-based Mueller Industries to Connecticut-based Genesee & Wyoming Inc. for $54 million in cash.
Utah Railway operates more than 423 miles of track and interchanges with Union Pacific and Burlington Northern Santa Fe. It operates more than 45 miles of owned track and 378 miles under track access agreements.
Those rights include agreements with Union Pacific from Provo to Grand Junction and with BNSF from Provo to Ogden. Part of the company's business involves shipping coal to utilities in Utah and Nevada and other export and industrial markets.
The company also serves industrial customers in and around the Salt Lake area as the Salt Lake City Southern Railroad through trackage rights from the Utah Transit Authority. Utah serves its customers using 23 locomotives.
Utah Railway had revenue of about $23.7 million in the 12 months ended June 30.
Mueller said it will gain about $30 million after-tax on the sale, which needs, among other things, approval of the Surface Transportation Board.
Mueller chairman Harvey L. Karp said the sale concludes Mueller's plan to dispose of non-core business assets and increase its cash position by about $50 million.
Mueller manufactures copper tube and fittings; brass and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and copper impact extrusions; plastic fittings and valves; refrigeration valves and fittings; and fabricated tubular products.
Genesee & Wyoming said it plans to fund the transaction under an existing $103 million revolving credit facility. It has agreed to buy the Utah Railway stock and the Salt Lake City Southern Railroad subsidiary.
The boards of both companies have approved the acquisition, which is expected to be completed by the end of the third quarter.
Genesee & Wyoming also has received an underwriting commitment from Fleet National Bank for $250 million in new senior secured credit facilities, providing access to capital for general corporate purposes including additional acquisitions.
"The Utah Railway has provided 90 years of excellent service to the coal producing region of Utah and has been well operated by its parent company," said Mortimer B. Fuller III, Genesee & Wyoming's chairman and chief executive officer. In recent years, it has increased its presence by providing switching for BNSF and by the acquisition of the Salt Lake City Southern Railroad.
"As our most significant domestic acquisition to date, we believe that under our ownership we will be able to build upon the long history of Utah (Railway) and create new opportunities for growth," he said.
Genesee & Wyoming operates short line and regional freight railroads in the United States, Canada, Mexico, Australia and Bolivia. It also provides freight car switching and related services to industrial companies that have extensive railroad facilities within their complexes.
The company operates more than 8,000 miles of owned and leased track and operates more than 2,700 miles under track access agreements.
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