FTAI Infrastructure is acquiring US regional freight railroad firm The Wheeling Corporation for $1.05bn (€902m) in a deal partly funded by a $1bn capital injection from Ares Management as part of a $2.25bn refinancing.
FTAI, which is managed by an affiliate of Fortress Investment Group, has agreed to acquire the Wheeling & Lake Erie Railway (W&LE) from an entity controlled by Larry Parsons, CEO of The Wheeling Corporation.
FTAI said it also plans to refinance its existing senior notes and preferred stock with $2.25bn in commitments, including $1.25bn of new debt and the $1bn preferred stock investment from Ares for a newly formed holding company that will own W&LE and FTAI’s railway and transportation company Transtar.
The source of Ares’ capital was not disclosed. The firm runs infrastructure and credit divisions, both of which specialise in providing flexible capital for real assets and transportation businesses.
W&LE is a regional freight railroad serving customers along over 1,000 miles of track in the states of Ohio, Pennsylvania, West Virginia and Maryland.
Ken Nicholson, CEO of FTAI Infrastructure, said: “Growing our freight rail platform has been a key focus for FTAI, and we are thrilled to have this opportunity to combine with the W&LE. We believe the W&LE is an excellent candidate for a combination with Transtar, adding scale, diversification and network reach.
“Together, Transtar and the W&LE have identified several growth opportunities and operating efficiencies that we expect to drive substantial growth in revenue and EBITDA. As a result of these opportunities, we expect our combined freight rail segment to generate approximately $200m of annual adjusted EBITDA by the end of 2026.”
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