Norfolk Southern to purchase assets of the Cincinnati Southern Railway
Posted: 23 November 2022 | Elliot Robinson (Editorial Assistant - Global Railway Review) | No comments yet
Norfolk Southern are acquiring assets of the Cincinnati Southern Railway to help eliminate uncertainty around the future control of the line and lease costs.
The Norfolk Southern Corporation (NSC) have 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 (CSR), an approximately 337-mile railroad that runs from Cincinnati, Ohio to Chattanooga, Tennessee.
Acquiring Cincinnati Southern Railway
The CSR is currently owned by the City of Cincinnati and operated by the Cincinnati, New Orleans, and Texas Pacific Railway Company (CNOTP), a wholly owned subsidiary of Norfolk Southern Railway, under a lease agreement expiring in 2026.
The agreement provides the company ownership with 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.
“The Cincinnati Southern Railway is a critical artery linking the Midwest and the Southeast, and it plays an important role in our powerful network that serves more than half the U.S. population,” Alan H. Shaw, President and Chief Executive Officer of Norfolk Southern, said. “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.”
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Cincinnati after the acquisition
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 $1.62 billion. 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, modernisation, 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.
Related topics
Funding & Finance, Infrastructure Developments, Mergers & Acquisitions, Regulation & Legislation
Related organisations
Cincinnati Southern Railway (CSR), Norfolk Southern Corporation (NS)