On February 26, 2007, the FRA rejected a proposed $2.3 billion loan to DM&E. The railroad never did find the money to do the expansion into the Powder River Basin of Wyoming to haul coal. Eventually the railroad and it's sister line the IC&E were sold to CP. Later selling to Genesee* and Wyoming Railroad company. It operates now as the Rapid City, Pierre and Eastern Railroad. Thinking over what's happened in the world in the last 13 years, where would DM&E be now, if it had gotten the $2.3 billion FRA loan?*How is Genesee pronounced? juh-NIECE? or jen-UH-see?
Thanks to Chris / CopCarSS for my avatar.
Somebody would probably been eating the loan.
I have always heard it pronounced JEN-uh-see
JEN-uh-SEE.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
Larry, is Genesee beer still a going concern? I lived in Syracuse from like '77 to '80, and that's all we drank.
Murph:
Had things been different, DM&E might have still been swallowed-up by one of the Class 1's. Nobody at the time thought the coal market would crash like it did. The pressures of somebody getting direct access into the PRB might have created some strange bedfellows, but we may never know what was actually going on behind the scenes. The engineering side of the equation was very competent, the operating side a little less so.
The stuff in the green bottles and cans, not to be confuzed with Rolling Rock is still out there. Shoenling Little Kings is still out there as well from the bad old days. Folks in the east half of the country probably recognize the name. Kinda funny to see how Trader Joes and others pass off eastern beer as something special(?)...never were what is passed-off as microbreweries today.
(Does Electroliner remember seeing Arte Johnson's commercials for Hudepohl?)
Wasn't the potential PRB access one of the main reasons behind CP's interest in DM&E?
Greetings from Alberta
-an Articulate Malcontent
Lithonia OperatorLarry, is Genesee beer still a going concern? I lived in Syracuse from like '77 to '80, and that's all we drank.
Yes it is, though it has changed owners and names a few times since you were in Syracuse. But it's back to Genesee Brewing now!
https://en.m.wikipedia.org/wiki/Genesee_Brewing_Company
https://www.geneseebeer.com/
Maybe? DM&E and CP were pretty tight before the coal idea came up. When the railroad was sold, the deal was something like $1.8 billion, plus another $1 billion if the coal line got built later.
adkrr64Lithonia Operator Larry, is Genesee beer still a going concern? I lived in Syracuse from like '77 to '80, and that's all we drank. Yes it is, though it has changed owners and names a few times since you were in Syracuse. But it's back to Genesee Brewing now!
Ah, yes. Genny Cream Ale. Some folks love, others not so much. It's OK.
A throwback to one of their advertisements, tied together with what would be horrible medical advice today, making it all, of course, a joke:
A woman went to the doctor with signs and symptoms of pregnancy. After a thorough examination, the doctor confirmed that she was, indeed, pregnant. He also advised her to drink Genesee beer.
This struck her as curious, so she inquired further, to which the doc replied, (sing along if you know the tune) "Genny is the one beer to have when you're having more than one..."
Groan as appropriate.
Now, back to trains.
Edit - I had the beer wrong - it was Schaeffer - but the joke is still worth a chuckle...
MidlandMike Somebody would probably been eating the loan. I have always heard it pronounced JEN-uh-see
tree68Ah, yes. Genny Cream Ale. Some folks love, others not so much. It's OK.
To tell you the truth, we drank that exclusively for about 2 1/2 years purely because it was the cheapest. Very cheap, because we were basically destitute. (I was working as a darkroom slave, and my wife was going to school at Syracuse U.) I think we were paying about $8 for a case of 24. Then one day we decided we couldn't stomach another can of it. After that we switched to Labatt's Blue.
Nowadays I drink pretty much only dark beer (try Nitro milk stout ), so I'd probably no longer like the Labatt's either. But it was a step up from the Genny Cream.
Murphy SidingAnybody know how that works if it was an FRA loan? Would FRA have to foreclose and then try to find a buyer?
You might find the following reading of interest. The section titled "Loan Costs" prescribes a combination of factors to assure that the loans function at zero cost to the government. A combination of "Credit Risk Premium" paid by the borrower, as well as collateral to guarantee the loan.
So, I guess your answer is in there.
Also interesting is the table listing names and amounts of entities to have already taken advantage of the program. D,M,&E having already been to the well twice.
https://fas.org/sgp/crs/misc/R44028.pdf
Also, if you review the aplication form here (got to download a *.docx copy) it is pretty evident that collateral is a necessary part of the process.
https://www.transportation.gov/buildamerica/financing/forms/rrif-and-tifia-application-form-doc
Convicted One Murphy Siding Anybody know how that works if it was an FRA loan? Would FRA have to foreclose and then try to find a buyer? You might find the following reading of interest. The section titled "Loan Costs" prescribes a combination of factors to assure that the loans function at zero cost to the government. A combination of "Credit Risk Premium" paid by the borrower, as well as collateral to guarantee the loan. So, I guess your answer is in there. Also interesting is the table listing names and amounts of entities to have already taken advantage of the program. D,M,&E having already been to the well twice. https://fas.org/sgp/crs/misc/R44028.pdf
Murphy Siding Anybody know how that works if it was an FRA loan? Would FRA have to foreclose and then try to find a buyer?
Murphy Sidingeing the geek I am, I read the whole ting
Amtrak sure has helped themselves.
Convicted One Murphy Siding eing the geek I am, I read the whole ting Amtrak sure has helped themselves.
Murphy Siding eing the geek I am, I read the whole ting
Murphy Siding It makes me jittery to think that a government agency had to borrow money through a government agency
Perhaaps that is somebody's idea of "vertical integration"?
At this point, I'm really wondering how the determination of value for the collateral is made? Market value at present, or some formula based upon what the eventual value might be after rehabilitation has been completed?
If the latter, it sure seems like it opens the door for creative minds to prosper, with clandestine opportunity. I don't know if you've followed some of the hustles put together by unscrupulous charter school operators.....but.....oh well, I'm sure you get my drift.
Murphy SidingMaybe? DM&E and CP were pretty tight before the coal idea came up. When the railroad mas sold, the deal was something like $1.8 billion, plus another $1 billion if the coal line got built.
Yes, this is how I read it as well. CP wanted DM&E for the same reason IC wanted back it's Chicago to Omaha line. I am not sure of the specifics but it had something to do with hauling grain and crops and being able to charge more with a line into prairie country that originates the traffic. With the DM&E line I believe CP gets better rates on some originating seasonal crop traffic and can haul it longer distance. Probably also institute those unit train limits and load out areas for unit trains as well.
In other words, looks like the Class I's abandoned just a little too much of their former granger lines and are now learning of the full revenue loss of doing so.
Kind of interesting as I wonder if CP would have wanted to hold onto the former Milwaukee Road to Omaha as well if the tracks were not gone now.
CMStPnP Murphy Siding Maybe? DM&E and CP were pretty tight before the coal idea came up. When the railroad mas sold, the deal was something like $1.8 billion, plus another $1 billion if the coal line got built. Yes, this is how I read it as well. CP wanted DM&E for the same reason IC wanted back it's Chicago to Omaha line. I am not sure of the specifics but it had something to do with hauling grain and crops and being able to charge more with a line into prairie country that originates the traffic. With the DM&E line I believe CP gets better rates on some originating seasonal crop traffic and can haul it longer distance. Probably also institute those unit train limits and load out areas for unit trains as well. In other words, looks like the Class I's abandoned just a little too much of their former granger lines and are now learning of the full revenue loss of doing so. Kind of interesting as I wonder if CP would have wanted to hold onto the former Milwaukee Road to Omaha as well if the tracks were not gone now.
Murphy Siding Maybe? DM&E and CP were pretty tight before the coal idea came up. When the railroad mas sold, the deal was something like $1.8 billion, plus another $1 billion if the coal line got built.
I think it was more to get back to Kansas City. All though it's conventional wisdom for railfans that the coal line was the big reason, I think the projected coal line was the least of the CP's considerations.
Jeff
jeffhergert CMStPnP Murphy Siding Maybe? DM&E and CP were pretty tight before the coal idea came up. When the railroad mas sold, the deal was something like $1.8 billion, plus another $1 billion if the coal line got built. Yes, this is how I read it as well. CP wanted DM&E for the same reason IC wanted back it's Chicago to Omaha line. I am not sure of the specifics but it had something to do with hauling grain and crops and being able to charge more with a line into prairie country that originates the traffic. With the DM&E line I believe CP gets better rates on some originating seasonal crop traffic and can haul it longer distance. Probably also institute those unit train limits and load out areas for unit trains as well. In other words, looks like the Class I's abandoned just a little too much of their former granger lines and are now learning of the full revenue loss of doing so. Kind of interesting as I wonder if CP would have wanted to hold onto the former Milwaukee Road to Omaha as well if the tracks were not gone now. I think it was more to get back to Kansas City. All though it's conventional wisdom for railfans that the coal line was the big reason, I think the projected coal line was the least of the CP's considerations. Jeff
There were numerous articles about the purchase in the Wall Street Journal and other non-railfan publications. I distinctly remember EHH being quoted in interviews saying the reason for the purchase was the existing railroad.
The bulk of it was the IC&E which was and is all former Milwaukee Road lines.
The DM&E, which was former C&NW trackage, was actually the smaller entity in terms of route miles when it purchased I&M Raillink, which was all former MILW trackage. They operated the renamed Iowa, Chicago & Eastern and the Dakota, Minnesota & Eastern as one railroad, bulking up a connecting line between Owatonna, MN and Austin, MN and running through freights from Huron, SD to Chicago.
EHH sold off all of the DM&E west of Tracy, MN in very short order to Genessee & Wyoming, keeping the great majority of DM&E traffic for CP. On the renamed Rapid City, Pierre & Eastern west of the Missouri River is a long stretch of over 100 miles of 10 mph track with very little on line business.
On the other hand, all the former IC&E track remains as part of the CP system.
I agree it was access to KC and all the additional grain, ethanol and other traffic on the lines that were the big drivers in CP Re-acquiring the lines.
kgbw49. I distinctly remember EHH being quoted in interviews saying the reason for the purchase was the existing railroad.
Wasn't there some speculation that CP was acting in a "white knight" capacity for the Mayo clinic, in order to quell the Rochester conflict?
Convicted One kgbw49 . I distinctly remember EHH being quoted in interviews saying the reason for the purchase was the existing railroad. Wasn't there some speculation that CP was acting in a "white knight" capacity for the Mayo clinic, in order to quell the Rochester conflict?
kgbw49 . I distinctly remember EHH being quoted in interviews saying the reason for the purchase was the existing railroad.
Murphy SidingWhy would he do something like that? It wouldn't lower the OR
Perhaps the Mayo Clinic was "banking" organs for him? As one get's older, priorities often change.
Convicted OnePerhaps the Mayo Clinic was "banking" organs for him? As one get's older, priorities often change.
Lot of good that did.
Or there could have been significant stockholders having split sympathies...
Convicted One Or there could have been significant stockholders having split sympathies...
The reality is the DM&E and IC&E were very profitable. The ethanol mandates meant a proliferation of large plants with prodigious amounts of stable, year-round traffic that for the most part had not been on the lines when they had been spun off. The lines were, and still are, profitable in their own right, which is why CP purchased them.
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