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[quote]QUOTE: Originally posted by edblysard True, But you have to Buy fuel, fix track, and replace frogs (cost out one of those!) Lease the locomotives; pay to have them brought to you... Revamp the buildings, purchase some vehicles, (crew van or pick up truck) Buy spikes, tie plates, ties...get the power/ water/gas turned on, get some form of insurance...the list could go on far a while, but you get the point. The first thing you must do is get a mudchicken to come out and look it over, tell you what has to be fixed before you turn a wheel, what can wait a month, or a year. You have to pay your employees, even before some of them step foot on property, no one will show up and put in time with out pay. 10 million will cover most of this and leave you a reserve, albeit not a large one, to cover the unexpected things. The 1.2 million asking price is the value of the land and the scrap value of the tracks and buildings…not the total “value” of an ongoing enterprise. We don’t know if the price is only for the ROW, or is there additional property along the ROW, or outside the railroad altogether. Currently running only part of the railroad to serve the woodchip and cardboard company, the rest is to be scrapped, if I read LC’s comments correctly. I would surmise the first step is getting firm commitments from the coal mines and the power plant, new interchange agreements from CSX and NS, and a buyer for the metallurgical grade coal. Sure, it’s a back of the envelope exercise, but bigger and more profitable things have started out as nothing more than an idea in a garage, such as Apple. (well, see what happens when you go to a ball game and come back and finish a posting!) Ed [/quote] Essentially correct Ed. The first step is bid for the property or at least discuss it with the owner (Class 1 or otherwise). This will lead to an opportunity to conduct the basic due diligence necessary to construct a bid or offer. This will include an opportunity to hirail and inspect the property (without this, I'm not interested). This also gives me a chance to bring my VP along to inspect (my MC, in effect). The inspection tells me what I need and what I can live with. It also tells me what scrap and spare material is on the property already so I can bargain for it to be included in the purchase. This usually is effective and saves quite a bit of $$. One reason consultants like me can be worth it to aspiring short liners. As to the RR, we wouldn't plan on scrapping it as the OOS portion will be needed to reach the coal loadouts we are projecting. I would want to get input and perhaps even some financial help from the coal mining companies in the purchase. I'd look to bring them in for 10% of the investment, about $120,000 or more to help buy the property. This would also sell a few shares. Remember, this little line is projected to throw off a free cash flow of $750,000 or so in 5 years. If you can get three of these going 5 years after starting the last you would have cash flow $2.25 Million, minus any additional staff and growth costs. Probaby in the neighborhood of $2Million. Enough to acquire even more lines and do some upgrading, or even pay a dividend to the shareholders. LC
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