RailAmerica to buy RailTex for $208 million

BOCA RATON, Fla. (Reuters) - RailAmerica Inc. said Thursday that it agreed to acquire RailTex Inc. for about $208 million in cash and stock, creating one of the largest short line/regional freight railroad operators.

Shareholders of San Antonio-based RailTex will receive $13.50 per share in cash and two-thirds of a share of RailAmerica stock, according to the company. The deal also calls for the assumption of $117 million in RailTex debt.

The new railroad company is expected to have revenues of about $450 million in its first year. RailAmerica will own or have equity interests in 51 railroads operating over 12,500 total track miles in key regions of the United States, Canada, Chile, Mexico and Australia.

Following the transaction, RailTex shareholders will own about 35 percent of the combined company. ``We will have a stronger balance sheet, a significantly larger market capitalization, enhanced shareholder liquidity and a more diversified, balanced portfolio of North American and international railroads,'' said Gary Marino, RailAmerica's chairman, president and chief executive officer, who will continue in those same roles.

Ronald Rittenmeyer, chairman, president and chief executive officer of RailTex, will remain as an advisor and consultant to RailAmerica after completion of the transaction.

RailAmerica said that the transaction, which will be accounted for using the purchase method of accounting, is expected to be accretive to its cash flow and earnings per share and result in cost savings of at least $10 million. RailTex, operating 26 railroads over about 4,100 route miles, is currently North America's largest short line railroad company, with operations concentrated in the southeastern, Midwestern and New England regions of the United States, as well as Eastern Canada and Mexico.

RailAmerica owns or has equity interests in 25 short line and regional railroads operating more than 8,400 route miles in the United States, Australia, Canada and the Republic of Chile. The deal, which is expected to close in early 2000, is subject to shareholder approval by both companies, and regulatory approvals.

Following completion of the transaction, RailAmerica will generate about 75 percent of its earnings from its North American operations, and will employ about 2,600 people worldwide. Ahead of the news,

RailTex shares ended the day up 1/8 to 15-5/8 while RailAmerica shares closed up 1/16 to 9-3/4. 1

7:47 10-14-99

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