FTAI Infrastructure is acquiring US regional freight railroad firm The Wheeling Corporation for $1.05bn (鈧�902m) in a deal partly funded by a $1bn capital injection from Ares Management as part of a $2.25bn refinancing.
FTAI, which is managed by an affiliate of Fortress Investment Group, has agreed to acquire the Wheeling & Lake Erie Railway (W&LE) from an entity controlled by Larry Parsons, CEO of The Wheeling Corporation.
FTAI said it also plans to refinance its existing senior notes and preferred stock with $2.25bn in commitments, including $1.25bn of new debt and the $1bn preferred stock investment from Ares for a newly formed holding company that will own W&LE and FTAI鈥檚 railway and transportation company Transtar.
The source of Ares鈥� capital was not disclosed. The firm runs infrastructure and credit divisions, both of which specialise in businesses.
W&LE is a regional freight railroad serving customers along over 1,000 miles of track in the states of Ohio, Pennsylvania, West Virginia and Maryland.
Ken Nicholson, CEO of FTAI Infrastructure, said: 鈥淕rowing our freight rail platform has been a key focus for FTAI, and we are thrilled to have this opportunity to combine with the W&LE. We believe the W&LE is an excellent candidate for a combination with Transtar, adding scale, diversification and network reach.
鈥淭ogether, Transtar and the W&LE have identified several growth opportunities and operating efficiencies that we expect to drive substantial growth in revenue and EBITDA. As a result of these opportunities, we expect our combined freight rail segment to generate approximately $200m of annual adjusted EBITDA by the end of 2026.鈥�
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