Friday, May 10, 2013

New investment capital for Iowa Pacific

Written by  William C. Vantuono, Editor-in-Chief
West Texas & Lubbock Railway West Texas & Lubbock Railway
Iowa Pacific Holdings, LLC announced on May 10 that it has reached a preliminary understanding with two institutional investors for up to $35 million of new capital that will be used to expand working capital availability, retire a Federal Railroad Administration RRIF loan, and fund track improvements. The company expects to close on the financing in the second quarter of 2013.

“With the rapid expansion of freight traffic in the Permian Basin, and the need for additional capacity and track improvements there, we have stretched our currents lines of credit to the limit,” said Howard Clark, Chief Financial Officer. “We are grateful to several vendors who extended payment terms, which has kept the business growth on track. And, while we appreciate the role the FRA loan program has played, it became evident that FRA was not able to assist us in this growth.”

Iowa Pacific’s freight carloads grew from around 2,500 in December 2012 to 4,950 in April 2013, virtually doubling the size of the operation in four months, primarily as a result of increased activity in the Permian Basin oilfield. The company has sought to hire additional train, track, and mechanical employees to keep pace with customer demand.

“The new financing will improve our liquidity and enable us to continue to make improvements to track on the Texas-New Mexico and the West Texas & Lubbock, which are experiencing a tsunami of new traffic,” said Ed Ellis, President. “We intend to invest about $20 million in those railroads over the next couple of years.”