FTAI Infrastructure Inc. Expands Operations by Acquiring W&LE
FTAI Infrastructure Inc. Acquires Wheeling & Lake Erie Railway
FTAI Infrastructure Inc. (FIP) has recently revealed its strategic decision to acquire The Wheeling Corporation, the owner of the Wheeling & Lake Erie Railway Company (W&LE). This agreement, valued at $1.05 billion, brings forth an exciting opportunity for FIP to enhance its portfolio in the freight rail sector.
Significance of the Acquisition
The W&LE operates a Class II regional freight railroad system stretching over 1,000 miles. This extensive network serves more than 250 customers across various states, emphasizing its importance in freight transportation. By acquiring this railway, FIP aims to expand its reach and operational capabilities significantly. The acquisition is expected to enhance synergy with Transtar, another entity within FIP's operational framework.
Strategic Financing for Growth
To facilitate this acquisition, FIP has organized a robust financing plan. The company has secured total capital commitments of $2.25 billion, which includes $1.25 billion designated for new debt issuance and $1 billion in preferred stock slated to be purchased by Ares Management funds. This plan illustrates FIP's proactive approach in enhancing its financial structure as it prepares for the integration of W&LE.
Projected Growth Outcomes
In statements regarding the acquisition, Ken Nicholson, CEO of FIP, expressed enthusiasm about the growth prospects that this merger will provide. He emphasized the expectation of substantial annual revenue increases, anticipating the combined freight rail division could generate around $200 million in Adjusted EBITDA by the end of 2026. These projections underlie the strategic value of the acquisition, aligning with FIP's overarching growth objectives.
Legacy of Leadership
Larry Parsons, who has been instrumental in transforming the W&LE since 1992, will carry the vision of the company into this new chapter. His leadership has turned the W&LE into a modern and customer-centric entity, and his decision to partner with FIP signifies trust in the latter's operational excellence and values.
Transaction Timeline and Future Plans
The acquisition is anticipated to proceed under the purview of a voting trust as set by the U.S. Surface Transportation Board, with a closure expected in the third quarter of 2025. This timeline reflects the necessary regulatory approvals needed for the transaction, which will see W&LE become an affiliate of Transtar.
Legal and Financial Advisory Teams
In this transaction, Barclays and Deutsche Bank are playing pivotal roles as financial advisors, providing essential assistance in structuring and facilitating this complex deal. Legal advisories include Sidley Austin LLP and Skadden, Arps, Slate, Meagher & Flom LLP for FIP, and Calfee, Halter & Griswold LLP alongside Fletcher & Sippel LLC for W&LE.
About FTAI Infrastructure Inc.
FTAI Infrastructure Inc. specializes in investments in essential infrastructure sectors with high barriers to entry. By focusing on railroads, ports, terminals, and energy sectors, FIP seeks to generate stable cash flow, growth in earnings, and appreciation of assets. Externally managed by Fortress Investment Group LLC, FIP's focus on operational excellence continues to be reflected in its recent acquisitions and business strategies.
Frequently Asked Questions
What is the value of FTAI's acquisition of W&LE?
The acquisition is valued at $1.05 billion.
How will the acquisition impact FTAI's operations?
This acquisition is expected to enhance FTAI's operational capabilities and revenue generation in the freight rail sector.
When is the expected closing date for the acquisition?
The deal is expected to close in the third quarter of 2025, pending regulatory approvals.
Who is leading FTAI Infrastructure Inc.?
Ken Nicholson serves as the CEO of FTAI Infrastructure Inc.
What services does FTAI Infrastructure focus on?
FTAI focuses on critical infrastructure across rail, ports, terminals, and energy, with a goal of generating steady cash flow and growth opportunities.
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