QUOTE: Originally posted by tormadel QUOTE: Originally posted by Limitedclear QUOTE: Originally posted by MP173 Ed: my only problem with this is that $10 million is being raised with on $1.2 million invested. I would be very leary of this, until I knew more of what was going to be happening with the $8.8 million. Just think of it this way....88 cents of every dollar would not be invested in this shortline. ed ed - If I was going to make an offering of this type, which I am NOT, there would be a complete set of financials and pro formas looking forward five years. Part of that would explain the need for working capital, capital investment on the existing property to bring it up to a usable state and other capital investment in equipment (if any) that would be necessary to convert partially unused and deferred maintenance track into a healthy short line... I chose the $10,000/share number to ensure my potential investors realized they would have real skin in the game and were willing to take such a risk. I have found that it is much easier to raise a LOT of capital than a little so long as the plan is sound. The $10,000,000 raise amount is larger than I would expect and in any event there are several legal and corporate reasons I would never do a real deal this way as it would require a public offering and all the headaches inherent in such a structure. As I have said above I would leave the financial structure open for now to make additional adjustments possible. So far, no one has suggested such an adjustment. LC Well I had not gone there yet but I would suggest a Limited Liability Corp orgainization rather then a standard corp. Would be much easier to deal with, but could restrict the number of investors you might have. But then again it's likely that anyone willing to invest that much may want to invest alot to have more say.
QUOTE: Originally posted by Limitedclear QUOTE: Originally posted by MP173 Ed: my only problem with this is that $10 million is being raised with on $1.2 million invested. I would be very leary of this, until I knew more of what was going to be happening with the $8.8 million. Just think of it this way....88 cents of every dollar would not be invested in this shortline. ed ed - If I was going to make an offering of this type, which I am NOT, there would be a complete set of financials and pro formas looking forward five years. Part of that would explain the need for working capital, capital investment on the existing property to bring it up to a usable state and other capital investment in equipment (if any) that would be necessary to convert partially unused and deferred maintenance track into a healthy short line... I chose the $10,000/share number to ensure my potential investors realized they would have real skin in the game and were willing to take such a risk. I have found that it is much easier to raise a LOT of capital than a little so long as the plan is sound. The $10,000,000 raise amount is larger than I would expect and in any event there are several legal and corporate reasons I would never do a real deal this way as it would require a public offering and all the headaches inherent in such a structure. As I have said above I would leave the financial structure open for now to make additional adjustments possible. So far, no one has suggested such an adjustment. LC
QUOTE: Originally posted by MP173 Ed: my only problem with this is that $10 million is being raised with on $1.2 million invested. I would be very leary of this, until I knew more of what was going to be happening with the $8.8 million. Just think of it this way....88 cents of every dollar would not be invested in this shortline. ed
QUOTE: Originally posted by edblysard The MK1500D, although ugly as sin, works great for our type of switching, and even though they are Cat powered, we have not have a major engine failure in the ten years they have been here. Ed
QUOTE: Originally posted by tormadel QUOTE: Originally posted by edblysard ed.... We did break one of the frames, and drove a piece of drill stem through another ones cab and electrical cabinet, but that’s another story! Ed Hehe, OOPS! I'm surprised, I had heard that someone had purchased the Houston Belt and Terminal, surprised the same thing didn't happen you ya'll (although I don't wish for anything like that)
QUOTE: Originally posted by edblysard ed.... We did break one of the frames, and drove a piece of drill stem through another ones cab and electrical cabinet, but that’s another story! Ed
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QUOTE: Originally posted by MP173 LC: I did read the facts, however you didnt mention other purchases, only this one. The investment turns from an investment in a shortline railroad into an investment in a portfolio of shortline and more importantly into the abilities of management to identify potential line, negotiate a fair price, operate and manage the line better than others. At this point my attention would turn from the actual 32 mile stretch of railroad to the people involved that are asking me for money. Do you care to share more on their past successes? ed
QUOTE: Originally posted by MP173 Things are a bit clearer....still, I would want to know more about the principals involved. That is just as important in a project like this as the assets. BTW...is this an informal solicitation? You have my interest, which is always the first step. ed
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: Originally posted by edblysard If I read the original few posting correctly, the big pay off are the two coal mines coming on line...and note that the coal is both power plant grade, and metallurgical grade, so at least one of the coal moves will be to interchange, not in captured service to the power plant. Although LC stated this was all a hypothetical concept, it sure sounds like it is based on a existing road, and he has put quite a great deal of thought into it...as for risk, not much is risk free any more, and if this does pan out, the initial investors will make out fairly well in the next five to ten years. If it was a real deal...I would seriously consider ponying up 20 grand and might even think about moving out of the swamp and switching railroads...rivers have backwaters too! Ed
QUOTE: Originally posted by MP173 Ed: Early posts indicate they are talking about leasing old locomotives, not purchasing. There has to be more to it than this, otherwise this investment is upside down...investing $10 million for a $1.2 million property. ed
QUOTE: Originally posted by tormadel I doubt the boardmember(s) are going to work 50hrs a week for$5000 a year. But I would not worry about the others. Getting this company up and started, then keeping it alive will take alot of work. Given these officers back grounds I do not think it's likely that they would shirk they're responsabilites. There is no room in the budget for assistants or the office toady, so it seems set out to me that the whole staff is dedicated to rolling up they're sleeves and doing it all.
QUOTE: Originally posted by MP173 Ed: There has to be more to it than this....you dont invest $10 million to purchase a $1.2 million railroad. but it is a fun concept. ed
QUOTE: Originally posted by SD38SD39locomotives QUOTE: Originally posted by tormadel I could see the arguements for lesser power, SD38's or something, but would they really be significantly cheaper? (I don't think there was such a thing as a C23-7 build, and it would probably have some problems like the C30's LC refers too). I'm thinking for the coal hauling we're talking about SD9's wouldn't cut the mustard, or Milwaukee rebuilt SD18s or ICG SD20s. Also a question of what kinds of deals can LC get on longer term leases? Could these lesser units I'm talking about do the trick on a 1 or 2 year lease untill the new traffic warrents the SD40's? Could it be that in those couple years down the road that SD40's won't be available at such a good price? (The SD50 mention pique's my interest, I like alittle variety and something alittle different). It would sound like that next good question is that trackage rights to the powerplant even a possiblity? We don't want to be choked by the class 1 being tardy about picking up our loads or doing they're share on the unit train. Is the power plant on the main line or another spur? Is purchase of the spur the powerplants on an option? (Class 1 may be more open in negotiation if they would have to short haul themselves otherwise) This could also be effected by the traffic density the class 1 has on these related lines. I'm sure they wouldn't want a shortline mucking around already congested pathways. Are we connecting to NS & CSX mainlines or branches? Heres one simple beauty about SD40s and shortline start up: If you get a good deal on 1 or 2 or 3 or how many involved. And if the per-axle weight of them is reasonable for the line being purchased. And you buy them, and then turns out ya got too much juice for the operation, then what was originally estimated/planned. Ya go the deturbo route. Now about this comment of SD9s not being able to cut the mustard? Examples are still ABOUND, of SD9s cutting the mustard to this very day. And older SDs are pretty darn cheap these days, but the loco market is always a changing. Right now, serviceable SD40-2s can be had for deluxe pick up truck prices. But after watching ( and studying the past history of the diesel loco market for 15 years now ), there are no guarentees on the used loco market prices. The only guarentee, is that used locos ( especially and most practicaly EMDs ) can be rebuilt, upgraded, and modified. And last I knew, there were only roots blowers available for HP capacity of only up to 3000horses. But with a flood of SD50s on the market, and they are out there now indeed, deturbo'd SD50s could be more attractive and practicle to the shortlines, bantam shortlines, and regional roads.
QUOTE: Originally posted by tormadel I could see the arguements for lesser power, SD38's or something, but would they really be significantly cheaper? (I don't think there was such a thing as a C23-7 build, and it would probably have some problems like the C30's LC refers too). I'm thinking for the coal hauling we're talking about SD9's wouldn't cut the mustard, or Milwaukee rebuilt SD18s or ICG SD20s. Also a question of what kinds of deals can LC get on longer term leases? Could these lesser units I'm talking about do the trick on a 1 or 2 year lease untill the new traffic warrents the SD40's? Could it be that in those couple years down the road that SD40's won't be available at such a good price? (The SD50 mention pique's my interest, I like alittle variety and something alittle different). It would sound like that next good question is that trackage rights to the powerplant even a possiblity? We don't want to be choked by the class 1 being tardy about picking up our loads or doing they're share on the unit train. Is the power plant on the main line or another spur? Is purchase of the spur the powerplants on an option? (Class 1 may be more open in negotiation if they would have to short haul themselves otherwise) This could also be effected by the traffic density the class 1 has on these related lines. I'm sure they wouldn't want a shortline mucking around already congested pathways. Are we connecting to NS & CSX mainlines or branches?
"We have met the enemy and he is us." Pogo Possum "We have met the anemone... and he is Russ." Bucky Katt "Prediction is very difficult, especially if it's about the future." Niels Bohr, Nobel laureate in physics
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