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Railstar Corp

PROJECT DESCRIPTION

Orchestrate rail line acquisition and business divestiture

 

BACKGROUND

After years of successful business operations and acquisitions, RailStar Corporation had grown beyond its capabilities. Ownership found the enterprise was no longer providing the benefits they had come to expect from their hard work and investment.

Ownership struggled to resuscitate the Belfast & Moosehead Lake Railroad, while simultaneously managing their long-standing propane delivery company, two marinas, Erie Canal Cruise Lines, Erie Canal Village, and real estate properties. The Belfast & Moosehead Lake operation siphoned capital from the other entities, with looming debt maturity in the form of an overvalued $950,000 balloon payment. The company sought to divest the profitable propane delivery business and found it challenging to sell at their desired price. Ownership also sought to grow the Georgetown Loop Railroad and acquire other tourist rail properties.

 

SRF’s STRATEGIC EXIT OPTIMIZATION IN ACTION

As is the first step of the Strategic Exit Optimization process, SRF generated a detailed accounting of all revenues, costs, and assets. After a thorough analysis, SRF empowered ownership with financial clarity and an intelligent strategy, implementing an action plan to address the challenges within each component business. SRF negotiated and settled the Belfast & Moosehead Lake contract for $15,000, rather than $950,000. Strategic Rail Finance assumed the stalled selling of the propane business and arranged a sale to a new buyer for $500,000 more than the previous highest offer. RailStar successfully began operating the Georgetown Loop Railroad and the Inland Lakes Railway.

 

SRF’s STRATEGIC EXIT OPTIMIZATION RESULTS

  • Saved ownership $935,000 in settlement costs with previous Belfast & Moosehead Lake owners
  • Increased sale price of clients’ business by $500,000
  • Identified $200,000 in tax savings through an innovative approach to business sale
  • Collected $100,000 in past due accounts receivables
  • Negotiated and collected $200,000 in repayment from long-term debtor