For sale: DM&E RR...

Discussion in 'Class II & Class III Railroads' started by John Barnhill, Jun 14, 2007.

  1. John Barnhill

    John Barnhill TrainBoard Member


    ROCHESTER, MN -- A sale announcement may be coming soon from the Dakota, Minnesota & Eastern Railroad, a rail industry magazine reports.

    Trains magazine, in a report posted to its Web site on Tuesday, said that DM&E's parent company, Cedar American Rail Holdings, is accepting bids from about 10 bidders. The bidders are finalizing their offers this week, the magazine reported.

    Among the bidders are three railroad companies: Canadian National, Canadian Pacific and a shortline railroad company that was not named.

    Cedar American Rail Holdings owns both the DM&E and Iowa, Chicago & Eastern railroads, which together make up a 2,000-mile-plus railroad system.

    DM&E was denied on Feb. 26 in its application for a $2.3 billion federal loan.

    Selling all or some of its assets is apparently how the company plans to finance a $6 billion upgrade and expansion project that would extend DM&E's reach from near Winona to Wyoming coal fields. The project would create the most direct rail route from the Powder River Basin to the Upper Midwest.

    The line passes through Rochester, Minnesota, whose leaders have objected to the project over fears that coal-train traffic would hurt the city.

    DM&E President and CEO Kevin Schieffer could not immediately be reached.

    According to Trains, however, Schieffer said last week in a letter to employees that "in the coming weeks, we will have potential investors and possible partners on the property."

    The railroad has federal approval for the expansion. A question is whether regulators' green light is transferable to a new owner.

    Rochester officials became aware of the magazine report this morning, said Mayo Clinic and Rochester Coalition spokesman Chris Gade.

    "Regardless of who owns the DM&E, our goals and issues will remain the same," Gade said. "We want to be sure the safety needs of our patients, staff and community are met and met in a substantial and meaningful way." - Jeffrey Pieters, The Rochester Post-Bulletin
  2. jwoods

    jwoods TrainBoard Member

  3. BoxcabE50

    BoxcabE50 Administrator Staff Member TrainBoard Supporter

    Hmmm. Curious that CP might be in the picture. After parting with what is now the IC&E, to possibly have it back? Well, following how the pieces come together on this possibility, could be interesting.

    Boxcab E50
  4. YoHo

    YoHo TrainBoard Member

    I have no doubt that CP and CN are drooling over the possibility of access to Powder River. Those companies also make the entire thing look more doable.
  5. jwoods

    jwoods TrainBoard Member

  6. John Barnhill

    John Barnhill TrainBoard Member

  7. Matthew Roberts

    Matthew Roberts TrainBoard Member

    They must really want Powder River Basin access...
  8. Gats

    Gats Administrator Staff Member TrainBoard Supporter

    Who wouldn't? There's plenty of money to be had shipping Powder River coal, particularly since the introduction of stricter emission laws.

    When BN developed the line they were forced into sharing with CN&W by the then ICC, which in turn made them very attractive to UP. Another player with better (read more direct) access would certainly upset the apple cart of BNSF and UP. Only problem with another would be line access and possibly capacity.

    With CN or CP involved, they may have the funds available to build the extension west, which has been a sticking point for the DM&E since they proposed the line, and to build additional trackage to access mines.
  9. BoxcabE50

    BoxcabE50 Administrator Staff Member TrainBoard Supporter

    Just for fun, and to confuse everyone, I've moved the thread! :eek:mg::teeth:

    Boxcab E50
  10. John Barnhill

    John Barnhill TrainBoard Member

  11. BoxcabE50

    BoxcabE50 Administrator Staff Member TrainBoard Supporter

    I've now seen the following in a couple of places:

    "...DM&E President Kevin Schieffer said the information in the magazine article did not come from his office and he puts no credibility in the report."

    Looks like the railfoam community might have generated another wild one.


    Boxcab E50
  12. YoHo

    YoHo TrainBoard Member

    Probably equally possible that CP or CN generated the press release to create pressure.
  13. jwoods

    jwoods TrainBoard Member

  14. BoxcabE50

    BoxcabE50 Administrator Staff Member TrainBoard Supporter

    It would be interesting to know how CN, or CP, could put pressure on the DM&E.

    Boxcab E50
  15. Ilovesd90macs

    Ilovesd90macs TrainBoard Member

    If CP got to powder river, that would be awesome. Roberts Bank would probably be where it would go right?
  16. YoHo

    YoHo TrainBoard Member

    Who are the stockholders in DM&E/Cedar?

    The pressure CP can apply is to make the purchase look attractive to owners. A hostile takeover as it were.

    DM&E isn't publically traded is it?
  17. BoxcabE50

    BoxcabE50 Administrator Staff Member TrainBoard Supporter

    Well, that's certainly possible. Might be a slightly roundabout trip.

    Boxcab E50
  18. BoxcabE50

    BoxcabE50 Administrator Staff Member TrainBoard Supporter

    I understand that CP can make a sale look attractive. If DM&E still has it in mind they can get to the Power River country, at this point, CP would need to make it a very, very sweet deal.

    They have sold stock. But I can't find evidence it's been publicly traded. Or a stock symbol. How are they incorporated?

    Boxcab E50
  19. YoHo

    YoHo TrainBoard Member

    They still want to go to Powder River. I can't imagine they wouldn't want to. Similalry, CP getting into Powder river would be huge. If DM&E is privately held, then it really depends on the character of the owners.
  20. jwoods

    jwoods TrainBoard Member

    This link has the actual story out of Trains magazine, with at few opinions at the end.

    I realize that DM&E hasn't formally stated that any of this is actually happening. However it seems like the next likely step in the way things are playing out. And relize that everything has been approved for them to expand they just need $$$$$.

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