Reason Not The Need: 2021 Financial Desk Book

Written by David Nahass, Financial Editor
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Welcome to the 2021 Railway Age Railroad Financial Desk Book. It’s been about seven months since the COVID-19 pandemic began in earnest in the U.S. Generally, people, and by extension the rail finance community, would like things/business to return to normal. Normal, however, is as much a state of mind when it comes to North American rail, since heading into the pandemic, rail was heading into a softening market hoping for a rebound.

Within the shadow of this new pandemic-esque normal, rail has begun to get off the mat. While general freight has been lagging, intermodal levels have leapt up over load levels from 2019. This is spurring concerns, real and fictional, over the possibility of congestion, as oftentimes load levels rise faster than crews are returned from furlough. (See “Financial Edge,” September 2020.)

While the industry searches for hope, stability and a sense of when it will be led to a land filled with greater promise, higher rates and increased loadings, Washington D.C., along with the Railway Supply Institute, have moved to engage Congress in formulating a rail equipment version of the infamous “cash for clunkers” automotive deal in 2009 (June to November 2009, when the $3 billion allocation was depleted). The Freight Rail Assistance and Investment to Launch Coronavirus-era Activity and Recovery (RAILCAR) Act was sponsored by six members of Congress and introduced in late August.

A short summary of the Act: In certain circumstances, car owners are offered a 50% tax credit for purchasing railcars with higher payload (increase of 8%) and a two-for-one railcar replacement. There is a similar provision tied to refurbishing assets or increasing fuel efficiency. Additionally, the RAILCAR Act would offer a 50% tax credit for the scrapping of older assets. (That 50% is calculated by subtracting the scrap value received from the current AAR Rule 107 value. The car owner gets 50% of that net amount.)

Many interested parties in the railcar and rail leasing industry would like an incentive to maneuver assets that are earning less than their keep into assets that might generate larger returns. So a two-for-one rationalization of older cars in the fleet (think 4,750cf covered hoppers) could be an opportunity for some modernization. And when you speak to a railcar manufacturer, they will point out that new car builds are a source of fleet modernization in capacity and gross rail load (GRL). That is a true statement.

But what gets lost in the translation is the fact that approximately two-thirds of the national fleet has been built since 1993, which was around the time cars started to be stenciled 286,000 GRL (the modern 286 truck design came into service in 2004). The move to 286 and the subsequent increase in capacity initiated many of the capacity changes that the RAILCAR Act supports. So while the move from 4,750cf to 5,400cf covered hoppers may create a five-to-four car count reduction, other car types—such as small-cube hoppers, centerbeam flat cars, many tank cars, coal cars, plastics hoppers and mill gondolas—are operating at max capacity or close enough to max capacity to not reach an 8% threshold, even if the two-for-one opportunity existed. Furthermore, in some cases where there have been changes in capacity, boxcars for example, those smaller capacity cars (Plate C cars) remain in high demand due to the right-sized nature of the commodity being hauled. While Plate F boxcars may be the design favored for PSR, and while PSR may have more capacity, it does not increase utility or reduce total car demand.

Industry veterans will remember how tax credit incentives lead to the overbuilding cycle in the late 1970s and early 1980s. In the modern era, rather than tax credits being sold to doctors, dentists and attorneys, the tax credits can be packaged and sold to Google, Target and Amazon. (This has been a frequent circumstance that has supported the installation of renewable energy and affordable housing, in which the tax credits were packaged and sold to parties that could use them in a more efficient fashion. It has been going on for years.) The point is that tax credits do not create demand. Tax credits do not create loadings. Tax credits can create railcar orders. But without the demand for the cars being built, North American rail, the industry with 477,000 railcars in storage, is going to be adding to a fleet that doesn’t need the additional capacity and additional cars.

One could see how lessors and OEMs could be in favor of the RAILCAR Act. And, to be fair, there is a benefit for intermodal cars and autoracks in addition to the aforementioned 4,750cf covered hoppers. The railroads maintain loading authority (OT-5) over which cars run on their tracks, so as a matter of business, the incentive to scrap cars won’t cause lease rates to increase. The average age of the national fleet is roughly 19.5 years. A generation ago, railcars were running to their 40-year interchange life. Now, a railcar has an interchange life of 50 years. If tax incentives are needed to cull the fleet and cars generally will be moved out of service in 20 or 30 years, investors will have to readjust their assumptions about railcar investments and their expectations around returns. That moves the risk and cost back to the shipper. Rail needs to grow market share. Higher costs to the shipper for the railcar don’t seem to be the pathway for success.

Industry sources with ties to Washington D.C. have checked in on the RAILCAR Act and the likelihood of passage. The Act has several factors lined up against it. ICYMI (in case you missed it), there’s a pandemic going on. The drop-off in economic business activity and its impact on Main Street USA and its residents is extraordinary. While Congress lumbered along and succeeded in providing the first stimulus bill, efforts to provide the second stimulus bill have stalled. Additionally, ICYMI, this happens to be an election year. As Congress enters a lame duck period heading to the election, the ability of Congress to deliver the RAILCAR Act as an add-on to a second stimulus plan or even less likely in advance of the passing of a second stimulus plan is, well, unlikely. Lastly, bills resembling the RAILCAR Act have floated around in Congress for some time (years) prior to this most recent iteration. While that is not an indicator that it cannot (or will not) be approved as legislation, it does mean that it hasn’t been put forth in meaningful fashion beforehand.

In Shakespeare’s tragedy King Lear, the eponymous character, an elderly king, is overwrought due to the loss of respect, power and love that befalls him as he recklessly discharges his kingdom to his ungrateful daughters. In a last gesture to retain some portion of his former regal life, Lear demands to be attended by a company of knights. When challenged on his desire to retain his retinue, Lear screams the famous line: “Oh, reason not the need.” Lear wants to know why he must explain himself and what he wants. After all, he was once the king. That moment in the play is the beginning of Lear’s shift from sanity to madness.

Drama can be about folly. This is the business of North American rail. It needs a strategy for growth. It needs a strategy to make freight rail a priority in North America. To create a strategy to incentivize the building of railcars in advance of the loads that need them is madness indeed.

Around The Market

Overall rates and car demand continue to languish. One lessor suggested that the current downturn could last through the end of 2022. What has always been a tough job, being an operating lessor in North America, is that much harder right now. Here is what is happening on the lease rate front.

Covered hoppers (grain): A bumper harvest and rising soybean prices have slightly lifted the spirits of portions of the farming community. The downside: Grain car rates continue to languish, with 5,150cf to 5,200cf cars leasing below $300 full service, and older 4,750s running sub-$200. One hope here is that rising intermodal traffic levels may clog up certain corridors and create some demand, but reliance on that strategy is a risk. If you have cars in a lease, keep them there.

Covered hoppers (plastics): Rates on newer cars are sub-$500 (net). COVID-19-related trade reductions have softened demand in the short term. New capacity projects are unlikely to be put on hiatus even if natural gas reaches the projected $3.40 MMBTU and stays above $3.00 for all of 2021 (Energy Information Administration projections for 2021). The 5,800cf cars are a mixed bag; sub-$300 is the most common rate.

Covered hoppers (sand and cement): With more than 10,000 cars coming back from lessees entering bankruptcy, this market continues to flounder with no reasonable resurrection in sight. Rates here are a mix of older leases, with numbers starting with threes and fours being reduced to starting with twos or ones and headed to being sub-$100 (net and in some cases full). Cement shippers are looking forward to bottom line gains as they reap the rewards of hauling a commodity that fits in the same size car as the juggernaut that once was frac sand.

Coal: It is slightly more positive than small-cube hoppers if only for the fact that coal has been bad for a longer time. Rates again are all over the place, but sub-$100 (net) here is normal. As renewables continue to out-generate coal (EIA, January-May 2020), hope continues to falter here. More than 80,000 coal cars were built from 2004 to 2009. Many of these are coming back into the market for the first time since being built. Continuing challenges lie ahead.

Tank cars: The interplay of regulation and softening demand has roiled parts of this market. DOT 117Rs (retrofit) cars are leasing for less than $350 (full). DOT 117Js (new) are leasing for mid-$500s (full). Other (non-crude) tank railcar types remain oversupplied, with the pressure car market continuing to remain stable with a negative bias.

Boxcars: This is a market that is both stable and oversupplied at the same time. The mix of demand for cardboard and the hoarding of toilet paper has helped to stabilize a market that prior to the pandemic was likely sitting on the edge where demand exceeds supply. Rental rates for 50-foot Plate F boxcars (non per diem) are in the low-$300s (full), with 60-foot cars in the mid-$400s (full, non per diem).

Mill gondolas: Similar to boxcars, mill gons are caught with some amount of demand for cars in a commodity market that cannot allow consumers to substantiate the need for equipment. While scrap has been on the rise ($245 per ton for Chicago heavy melt #1 in September), some softness in demand plus a lack of forward confidence continues to weigh on prices. Lease rates are mid-$300s (full service) for 50-foot cars, and low-$500s (full) for 66-foot cars.

ICYMI: FOMO Comes to the World of Rail

“Financial Edge” March 2020 discussed the “Cult of OR” (a Tony Hatch term) being followed by Wall Street and the incredible stock price metrics of the Class I’s, while posing the question of whether or not high flying equity values were prohibiting railroad loadings growth.

As an update, six of the seven Class I’s had hit a 52-week high in late August/early September, even as loadings have been down YOY. But that is not the point of this segment. In July, the private equity firm Blackstone made an offer to buy  Kansas City Southern for $190 per share, causing a 15% increase over the share price around the day the offer was made. By September, Blackstone had upped its bid to $208 per share, which with the assumption of debt rounded the total deal size out to $23 billion. Within a few weeks, KCS rejected the offer and halted ongoing discussions with Blackstone.

Now, it could be easy to target Blackstone as suffering from a bit of FOMO (fear of missing out). Warren Buffet buys BNSF in 2009. Brookfield takes Genesee & Wyoming private in 2019. Blackstone (and its partner Global Infrastructure Fund) could easily feel left out and could see KSU as a way of entering into the rail market in advance of the post-pandemic turnaround. Call it Blackstone CEO and Co-Founder Steve Schwarzman’s anxiety of influence from Warren Buffet.

KCS President and CEO Pat Ottensmeyer

However, as convenient an explanation that might be, that is the least interesting part of the story. KCS President and CEO Pat Ottensmeyer has discussed the current environment at KCS, his role in the completion of USMCA (United States-Mexico-Canada Agreement) and the opportunities for growth in Mexico during Railway Age’s Rail Insights Conference and in his January 2020 Railway Age Railroader of the Year interview; KCS CFO Michael Upchurch addressed similar sentiments when he presented at the Cowen and Company Transportation and Sustainable Mobility Conference in September. The takeaways: The mix of nearshoring, industrial growth in Mexico, and labor rates that are less than those in China have KCS positioned for a long-term period of growth. Concerns about the KCS exclusivity in Mexico seem overblown, leaving KCS with a government concession running to 2047. With the contemplated expansion plans many corporations have in Mexico (Ford, GM, Foxcomm, to name a few) rail seems poised to benefit. KCS will be a primary beneficiary of that growth.

Credit Blackstone for turning FOMO into an early recognition of the possibilities offered by KCS. However, the real award and the kudos go to the executive team of KCS, whose stock was $158 on July 30 (and below $100 in March 2020). The move to $208 per share (total deal size: $23 billion including the assumption of debt) would have represented a 31.6% increase in the price of the common stock from July if KCS had accepted the offer. No one could have faulted KCS management for taking the money and locking in returns for its shareholders (more than double its low price over LTM). Management’s bullishness on the value of the franchise, its potential for growth and the firmness of those beliefs is something needed in North American rail. KCS’s rejection of the Blackstone bid was a bet that growth in Mexico will outdistance that 30% pop and that it will make its shareholder upside more than Blackstone is willing to pay, at least for the moment. Stay tuned.

2021 RAILROAD FINANCIAL DESK BOOK DIRECTORY

FINANCE COMPANIES

BUNDY GROUP

Bundy Group is a boutique investment bank that specializes in representing business owners and management teams in business sales, capital raises and acquisitions. The firm is a senior-driven organization with offices in Charlotte, New York and Virginia. Bundy Group has been a recognized expert in the rail and transportation industry for more than a decade and has numerous successfully closed transactions in the segment.  In representing a business and its shareholders in exploring a sale or recapitalization, Bundy Group is focused on managing a structured process and delivering premium value for its clients. For more information about Bundy Group’s work in the rail space, please contact Jim Mullens at [email protected] or at 540-342-2151. For more information about Bundy Group visit www.bundygroup.com.

ARRANGERS

THE DAVID J. JOSEPH COMPANY

300 Pike Street, Cincinnati, Ohio 45202; Tel.: 513-419-6200; Fax: 513-419-6221; Trey W. Savage, VP Rail Group; Clint Rice, General Manager-Rail Equipment Group; Jeff Schmutte, Jeff Blake and Eric Hausfeld, Regional Sales Managers; Dan Dorsey, General Manager-Private Fleet; Steven R. Skeels, Chief Mechanical Officer; and Ann Edwards, Mgr. Retired Rail Assets (502-212-7365). The David J. Joseph Company’s Rail Group provides a broad range of transportation services throughout North America: single investor, leverage leases, freight cars, portfolio evaluation, remarketing fleet management, purchases and sales of portfolios, and private fleet management. Other services include freight car inspections and engineering services from design of new cars to complete ISL extended life, modifications and analysis; in addition to railcar dismantling for scrapping and parts reclamation.

RAILROAD FINANCIAL CORPORATION

676 N. Michigan Avenue, Suite 2800, Chicago, IL 60611; Tel.: 312-222-1383; Fax: 312-222-1470; David G. Nahass, President, Email: [email protected]; William J. Geiger, Senior Vice President, Email: [email protected]. RFC represents domestic and international clients in the following areas: debt and lease financing of all railcar types including coal cars, tank cars and covered hopper cars for sand and plastics; railcar and locomotive fleet acquisitions and sales; lease brokerage; mergers and acquisitions; equity and debt financing of rail property acquisitions, fleet and lease restructurings and/or refinancing. RFC also provides continuing education for the industry.

RR MERGERS & ACQUISITIONS

11 The Pines Court, Suite B, St. Louis, Missouri 63141; Tel: 314 878-1414; Fax: 314-878-1414; Robert Fowler, President, 314 878-1414 x227 Email: [email protected]. Jack Sickles, Vice President, 314 878-1414×221 Email: [email protected]. RR Mergers & Acquisitions has specialized in the sale of rail-focused companies for more than 15 years. Trusted professionals with long-standing relationships in the rail sector, RR Mergers interfaces with strategic and financial buyers finding the right buyer for a Company, to make the best deal happen. While maintaining confidentiality at all times, RR Mergers manages the total process of selling railroad industry suppliers, rail services companies and Short Line Railroads. RR Mergers provides advisory services to prepare the company for acquisition, developing a confidential information memorandum, negotiating term sheets, letters of intent and coordinating the due diligence process.

STRATEGIC RAIL FINANCE

1700 Sansom St., Suite 500, Philadelphia, PA 19103; (215) 564-3122. Michael Sussman, President and CEO. SRF has served for 23 years as trusted advisor to Class I and short line railroads, rail shippers, public sector agencies, and industrial developers. The firm has brought capital, clarity, and velocity to infrastructure development projects in 45 states and Canadian provinces. SRF integrates capital from public programs and private sources with growth marketing strategies and management consulting to position executives toward short-term objectives and long-term opportunities.

LESSORS

THE ANDERSONS RAIL GROUP

1947 Briarfield Blvd., P.O. Box 119, Maumee, OH 43537; Fax: 419-891-2749. Contacts: Joe McNeely, Rail Group President, 419-897-3646; Sean Hankinson, Vice President of Sales, 419-891-6352, [email protected]; Sam Anderson, Vice President of Operations, 419-891-4436, [email protected]. The Andersons Rail Group, a part of The Andersons, Inc., has served the rail industry for more than 30 years. The group owns a fleet of nearly 25,000 railcars which it leases to customers handling a wide variety of commodities. It also provides repair, maintenance and component manufacturing services to private railcar owners through its 26 repair shops and steel fabrication facility. With extensive knowledge in taxation, government regulations and railroad requirements, The Andersons Rail Group offers quality products and superior customer service. For more information, visit www.andersonsrail.com.

AMERICAN INDUSTRIAL TRANSPORT INC. (AITX)

100 Clark Street, St. Charles, MO 63301-2075. Tel.: 636-940-6000; Fax: 636-940-6100; Website: aitx.com. American Industrial Transport, Inc., headquartered in St. Charles, Missouri, is a leading solutions-provider of railcar leasing and repair services. AITX provides customers across diverse industries a flexible portfolio of leasing options from a railcar fleet, sourced and managed in-house. AITX and its subsidiaries also operate world-class railcar repair services through its specialized repair network spanning across North America. Offering a range of services from full to light repair, AITX’s repair capabilities include full-service repair facilities, mobile service units and onsite customer dedicated repair operations. AITX manages a lease fleet of more than 17,000 railcars owned by its affiliates and performs repair services on more than 10,000 railcars per year. Learn more about American Industrial Transport, Inc. at aitx.com.

ATEL LEASING CORPORATION

The Transamerica Pyramid, 600 Montgomery Street, San Francisco, CA 94111; Tel.: 415-616-3486; Ken Fosina, Executive Vice President, Email: [email protected]. Since 1977, ATEL has leased rail assets to America’s largest railroads and shippers. ATEL specializes in the leasing of all types of rail assets, including railcars, locomotives and maintenance-of-way equipment. ATEL targets railcars and locomotives built prior to 2005, but prefers new maintenance-of-way assets. Leases can be full service, but net leases are preferred. ATEL executes lease transactions directly and through its Capital Markets desk. Each year, ATEL’s Portfolio Management will sell rail assets from one of its Funds managing expiration.

CAI RAIL

Steuart Tower, One Market Plaza, 9th Floor, San Francisco, CA 94105. Tel: 415-788-0100; Fax: 415-788-3430. James H. Magee, President, email:jmagee@capps. com; Freddy Fernandez, Vice President-Operations, email:[email protected]. CAI Rail is an operating lessor in the new and used railcar space. CAI performs full service, net, per diem and finance leases on all railcar types. We have complete maintenance, engineering, operations and field marketing staff. In addition, CAI offers a comprehensive rail car customization and refurbishing program to meet our clients’ specifications. Our parent company, CAI International (NYSE: CAI) specializes in container leasing and sales as well as domestic and international intermodal logistics. So, let’s get moving!

CARMATH, INC.

25965 482nd Ave., Brandon, SD 57005; Walker Carmon, Vice President, Tel.: 605-582-8340; Email: [email protected]; John Goodwin, Sales Manager, Tel.: 605-582-8318; Email: [email protected]; Website: www.carmathinc.com. At CarMath, we believe every business should have the opportunity to lease quality railcars at a reasonable price.  We have the ability to lease both large and small groups of cars with a wide variety of leasing options and will customize a leasing program to best fit your needs.

CIT RAIL

30 South Wacker Drive, Suite 2900, Chicago, IL 60606; Tel.: 312-906-5701. CIT’s Rail division offers a full suite of railcar leasing and equipment financing solutions to rail shippers and carriers across North America. It manages one of the youngest and most diversified railcar and locomotive fleets in the industry and leverages its deep experience to empower customers. Contact us to learn how our transportation solutions can power your business. Visit cit.com/rail, call 312-906-5701 or follow @CITgroup.

C.K. INDUSTRIES, INC.

P.O. Box 1029, Lake Zurich, IL 60047-1029; Tel: 847-550-1853; Fax: 847-550-1854; email [email protected]. Brian M. Harris. C.K. INDUSTRIES, a privately held corporation, began its U.S. leasing operations in 1980, and offers its services to shippers, short line, regional and Class I railroads in North America. New investment opportunities up to $10MM of both new and used types of freight cars will be considered. Our existing lease fleet offers a wide variety of car types to meet your lease requirements. We offer mid to long terms, either on a full service or triple net basis.

THE DAVID J. JOSEPH COMPANY

300 Pike Street, Cincinnati, Ohio 45202; Tel.: 513-419-6200; Fax: 513-419-6221; Trey W. Savage, VP Rail Group; Clint Rice, General Manager-Rail Equipment Group; Jeff Schmutte, Jeff Blake and Eric Hausfeld, Regional Sales Managers; Dan Dorsey, General Manager-Private Fleet; Steven R. Skeels, Chief Mechanical Officer; and Ann Edwards, Mgr. Retired Rail Assets (502-212-7365). The David J. Joseph Company’s Rail Group provides a broad range of transportation services throughout North America: single investor, leverage leases, freight cars, portfolio evalu-ation, remarketing fleet management, purchases and sales of portfolios, and private fleet management. Other services include freight car inspections and engineering services from design of new cars to complete ISL extended life, modifications and analysis; in addition to railcar dismantling for scrapping and parts reclamation.

GATX CORPORATION

Thomas A. Ellman, President, Rail North America, GATX Corporation, 222 W. Adams Street, Chicago, IL 60606; Tel: 312-621-6200 Fax: 312-621-6546 GATX is a leader in the rail leasing industry with more than a century of experience, preeminent expertise in specialized railcars, and a growing international presence. GATX meets shipper and railroad needs with one of the largest lease fleets of tank and freight cars and locomotives in the world. We provide our customers with a unique mix of financial (global financing, valuation, structuring, leasebacks, joint ventures, partnerships) and mechanical (regulatory, maintenance, engineering, cleaning, inspection) services in North America. Contact via www.gatx.com or 1-800-428-8161

GREENBRIER LEASING COMPANY

One Centerpointe Drive, Suite 400, Lake Oswego, OR 97035; 800-343-7188; Fax: 503-968-4383; Email: [email protected]; Website: www.GBRX.com. Contacts: Larry Stanley, Sr. V.P. Finance; Tom Jackson, V.P., Marketing. GLC provides a full range of operating and financial leases of railroad freight cars to shippers, short line, regional, and Class I railroads. In addition to owning a fleet of nearly 10,000 railcars, we develop financial structures customized to meet a multitude of customer requirements including; full-service, net, and per diem leasing structures, with both short-term and long-term options, sale-leaseback and like-kind exchanges as well as upgrade and modification programs. Our approach allows customers to meet current needs and position their business to capitalize on future opportunities. The Greenbrier Companies [NYSE: GBX], headquartered in Lake Oswego, Ore., is the leading global integrated supplier of transportation equipment and services to the railroad and marine industries. We build new railroad freight cars in our 10 manufacturing facilities in the U.S., Brazil, Mexico, Poland, Romania and Turkey and marine barges at our Portland, Ore., deep-water site. We are the market leader in the design and production of intermodal, boxcar, gondola, tank car and covered hopper railcars. Our customers include railroads, shippers and leasing companies—partners who depend on us for innovative design, quality production and on-time delivery. In Europe, we build and refurbish railroad freight wagons through our operation in Poland. In Brazil, GBX is the leading manufacturer of railcars for the Latin American market thorough our joint venture called Greenbrier-Maxion. GBX offers full repair and refurbishment services on all railcar types through our 12 strategically located Greenbrier Repair & Services (GRS) locations. GBX also sells reconditioned wheel sets and provides wheel services at 9 locations throughout the U.S. GBX manages GBSummit, a 50/50 joint venture with Sumitomo Corporation of Americas, where we provide finished and machined railcar axles. Finally, we perform management services for customers on approximately 368,000 railcars through our Greenbrier Management Services (GMS) group, which provides industry-leading asset management and regulatory compliance through GMS’s new Regulatory Services Group.

INFINITY TRANSPORTATION

Powered by Global Atlantic. 1355 Peachtree Street, NE, Suite 750, Atlanta, GA 30309; Website: www.infinitygafg.com. Lee Martini, VP Sales & Marketing; Tel.: 678-904-6315; [email protected]; Brian Ottinger, VP Sales & Marketing; Tel.: 312-731-2763; [email protected]. Ken Johnson, VP Sales & Marketing; Tel.: 859-640-0362; [email protected] Infinity Transportation is a private lessor with a fleet of more than 10,000 railcars of varying types. Lease packages are tailored to meet customer needs, including a variety of short-term operating leases and long-term leveraged leases, as well as other assignment and deployment arrangements. Infinity prides itself on exceptional customer service and flexibility with regard to leases and railcar modifications to find the transaction and equipment to best serve our customers.

MODERN RAIL CAPITAL, LLC

One South Wacker Drive, Suite 3110, Chicago IL 60606 – Phone: 312-803-8851: Dan Penovich, President; Chris Gerber, Vice President Sales and Marketing. Modern Rail Capital is a railcar operating lessor that offers some of the youngest railcars in our industry. From tank cars to covered hoppers to a wide variety of other car types, we deploy assets in every industry, including oil, gas, plastics, agriculture and steel. Our proactive approach enables us to know your unique needs and railcar requirements, getting well-structured deals done, faster. MRC has been in business for 20 years and is a joint venture between Mitsui & Co. Ltd. and JA Mitsui Leasing of Tokyo.

RELAM (RAILWAY EQUIPMENT LEASING AND MAINTENANCE) INC.

7695 Bond Street, Glenwillow, OH 44139; (440) 439-7088.  John Roberts, CEO, Email: [email protected]. As a full-service leasing company, we offer complete MOW equipment leasing services. Each of our team members is knowledgeable, professional, prompt and courteous, one reason why our clients stay with us. We understand the importance of making every business transaction easy on the customer. We handle all the paperwork and logistics for every lease, so you can spend your time on more important things. We are committed to providing our clients with the highest level of service while remaining competitive in today’s market. RELAM knows railroad operations and the equipment involved.

RALTRAC, LLC

200 S. Wacker Drive, Suite 3100, Chicago, IL 60606; tel: 312-674-4742; fax: 312-421-2742; www.raltrac.com. RALTRAC (formerly RALCO) is a privately held, Illinois Limited Liability Company in the business of acquiring, managing and leasing railroad rolling stock on net or full services leases.  The Company has the intellectual and financial resources necessary to compete in the small cap lease market where its size and structure provide it with a competitive advantage. RALCO also provides consulting and advisory services to its clients. Contact: Peter Urban, Principal, [email protected], 847-975-3568 (mobile); Richard Johannes, Principal; Jason Urban, Principal.

RELCO LOCOMOTIVES, INC.

One Relco Ave, Albia, Iowa 52531. Tel.: 641-932-3030; Website: www.relcolocomotives.com. RELCO, as one of North America’s leading locomotive rebuild, remanufacturing and leasing companies, can provide a full range of locomotive leasing and maintenance services. Since 1961, RELCO has developed a reputation for providing the finest motive power and custom maintenance packages to fit any need:

  • Full line of both switching and road power available.
  • Specifications ranging from qualified to completely custom remanufactured.
  • Aftermarket systems upgrades available, including radio remote controls, microprocessor control systems, fuel management systems, etc.
  • Nationwide full-maintenance programs available.
  • Net, full-service, financial and sale/leaseback programs.

SMBC RAIL SERVICES LLC

300 South Riverside Plaza, Suite 1925, Chicago, IL 60606; Gene Henneberry, President & CEO (312) 559-4801; Mike McCarthy, Senior Vice President Leasing, (312) 559-4803. SMBC Rail Services is a full-service operating lessor, invested in all tank and freight car types, offering a broad selection of equipment leasing and financing products for the North American rail market. SMBC Rail can structure a solution for all your rail equipment needs, short and long term, full-service or net leases, sale/leaseback, or portfolio acquisition. Contact us via www.smbcrail.com or [email protected].

TEALINC, LTD.

1606 Rosebud Creek Road, Forsyth, MT 59327; Tel.: 406-347-5237; Fax: 406-347-5239; www.tealinc.com; Darell J. Luther, CEO, 406-347-5237 [email protected]; Julie Mink, President, 720-733-9922 [email protected]. Tealinc, Ltd. specializes in rail transportation solutions nationally and internationally. We are a rolling stock operating lessor and broker and we also provide marketing, transportation management and consulting services for car owners, shippers and suppliers within the rail industry. Our lease fleet consists of covered hoppers, open top hoppers, mill gondolas, flatcars, gondolas, etc. We have a combined 80 years of service and experience within the rail industry and have assisted both novice and experienced rail shippers best utilize the rail network they participate in.

TRINITYRAIL®

2525 N. Stemmons Freeway, Dallas, TX 75207. 1-800-631-4420. TrintyRail® provides access to the rail transportation businesses of Trinity Industries, Inc. With an owned and managed fleet of approximately 131,000 railcars, Trinity Industries Leasing Company (TILC) provides one of the largest railcar fleets in North America. In addition to comprehensive leasing and management services, our customers have access to extensive manufacturing and engineering resources, railcar maintenance, parts, asset management and advisory services, and on-site field support for operational assistance and training. An overview of our platform of integrated rail products and services is available at www.trinityrail.com.

VTG RAIL INC.

103 West Vandalia, Suite 200, Edwardsville, IL 62025. Bryan Vaughan, Regional Vice President Sales, 630-361-6745, [email protected]. Lynn Hayungs, Regional Vice President, Sales, 956-630-2723 ext. 206, [email protected]. VTG is a freight and tank railcar lessor offering operating leases and customer structured solutions. VTG also provides fleet management services for its customers and for other private railcar owners and operators. VTG is a customer service oriented leasing company that provides a best in class mix of service, operational and mechanical expertise at competitive lease terms. VTG invests in all freight car types.

WELLS FARGO RAIL

Wells Fargo Rail, 9377 W. Higgins Road, Suite 600, Rosemont, IL 60018; Telephone: 844-459-9664; Fax: 847-318-7588; Web: www.wellsfargo.com/rail. Email: [email protected]. Wells Fargo Rail is the largest, most diverse rail equipment operating lessor in North America. Whatever you’re transporting, we’ve got you covered with more than 175,000 railcars and 1,800 locomotives. Our team of experienced rail industry professionals is ready to listen to your needs and structure creative solutions to add value to your business.

PROFESSIONAL SERVICES

RAILROAD APPRAISAL ASSOCIATES

Division of The Occor Company; Management Consultants providing a variety of consulting services to the railroad and urban transportation industries and the financial institutions and leasing companies that serve them: Railcar and Locomotive Appraisal & Inspection Services for New and Used Equipment, Rail Equipment Portfolio Reviews and Valuation, Market Studies, General Consulting. We have more than 20 years of market experience and data. Patrick J. Mazzanti, President; Ronda Lemons, Assistant. Headquarters: 1914 Springdale Drive, Spring Grove, IL 60081, (815) 675-3300; E-mail: [email protected].

RAILSOLUTIONS, LLC

2593 Wexford-Bayne Road, Suite 205, Sewickley, PA 15143; 724-766-6699; Email: [email protected]; Website: www.railsolutions-llc.com; Robert Blankemeyer, President. RailSolutions LLC provides a broad variety of railroad equipment-related consulting, technical and advisory services to financial institutions, railroads, shippers and fleet owners with a primary focus on equipment valuation and appraisal services. RailSolutions LLC offers two publications on a subscription basis, The Investors’ Guide to Railroad Freight Cars and Locomotives and the RailSolutions Railroad Equipment Historical Database. Our firm draws on more than 45 years of railroad industry experience in railcar and locomotive equipment valuations supported by both a sound base of market data and advanced analytical techniques.

RR MERGERS & ACQUISITIONS

11 The Pines Court, Suite B, St. Louis, Missouri 63141; Tel: 314 878-1414; Fax: 314-878-1414; Robert Fowler, President, 314 878-1414 x227 Email: [email protected]. Jack Sickles, Vice President, 314 878-1414×221 Email: [email protected]. RR Mergers & Acquisitions has specialized in the sale of rail-focused companies for more than 15 years. Trusted professionals with long-standing relationships in the rail sector, RR Mergers interfaces with strategic and financial buyers finding the right buyer for a Company, to make the best deal happen. While maintaining confidentiality at all times, RR Mergers manages the total process of selling railroad industry suppliers, rail services companies and Short Line Railroads. RR Mergers provides advisory services to prepare the company for acquisition, developing a confidential information memorandum, negotiating term sheets, letters of intent and coordinating the due diligence process.

STRATEGIC RAIL FINANCE

1700 Sansom St., Suite 500, Philadelphia, PA 19103; (215)564-3122. Michael Sussman, President and CEO. SRF has served for 23 years as trusted advisor to Class I and short line railroads, rail shippers, public sector agencies, and industrial developers. The firm has brought capital, clarity, and velocity to infrastructure development projects in 38 states and Canadian provinces. SRF integrates capital from public programs and private sources with growth marketing strategies and management consulting to position executives toward short-term objectives and long-term opportunities.

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