UNITED States Class 1 Norfolk Southern (NS) has executed an agreement to purchase “substantially all” of the assets of the Cincinnati Southern Railway (CSR), which runs for 539.2km from Cincinnati, Ohio, to Chattanooga, Tennessee.
CSR is currently owned by the City of Cincinnati and operated by the Cincinnati, New Orleans and Texas Pacific Railway (CNOTP), a wholly-owned NS subsidiary, under a lease agreement expiring in 2026.
The acquisition will give NS ownership of the 3844.5ha of land under CSR infrastructure that it currently maintains and operates.
NS says that owning CSR in perpetuity will eliminate uncertainty over the cost of leasing what is one of the busiest sections of its network, used by up to 30 freight trains a day.
Subject to certain conditions, including approval by the voters of Cincinnati and the Surface Transportation Board (STB), the sale transaction is expected to close in the first half of 2024.
The City of Cincinnati will receive a cash consideration of $US 1.62bn which Norfolk Southern intends to finance through a combination of internal and external sources.
The city intends to use this payment to form a trust fund for the rehabilitation, modernisation or replacement of existing infrastructure such as streets, bridges, municipal buildings, parks and green spaces.
“The Cincinnati Southern Railway is a critical artery linking the Midwest and the Southeast and plays an important role in our powerful network that serves more than half the US population,” says NS president and CEO, Mr Alan Shaw.
“This agreement sets the framework for Norfolk Southern to own a core line in our network in perpetuity, allowing us to advance our strategic objectives of improving service, enhancing productivity and creating an even stronger platform for accelerated growth, all while eliminating uncertainty around future control of the line and lease costs.”