Bangor & Aroostock Railroad

Bangor & Aroostock Railroad

Bangor & Aroostock Railroad

PROJECT DESCRIPTION

Optimize value of railroad property and crossing agreements

 

BACKGROUND

This 850-mile U.S. and Canadian operation requested assistance to sell off right-of-way and property leases to generate short-term cash.

In 2001, after decades of managing this diverse and wide-ranging set of property and crossing agreements, Bangor & Aroostock’s real estate agreements had grown beyond the company’s ability to update and manage their accuracy. The true value of these assets was unknown to the company itself; Bangor & Aroostock was therefore not able to make a clear presentation. These assets were subsequently “off the table” in negotiations to sell the railroad.

 

SRF APPROACH

Strategic Rail Finance evaluated every agreement in the railroad’s portfolio and reduced an outdated list of 3,000 line-items to an accurate count of 1,104. SRF updated the lease rates on all remaining agreements.

 

RESULTS

  • Renewed appreciation for the long-term opportunity to develop the land adjacent to the right-of-way
  • Identified ready-at-hand buyers for the long-term lease revenue streams
  • Clarified legal and practical issues for closing an asset sale
  • Identified the buyer of the railroad as having the most to gain from land ownership
  • Land assets were sold at their highest value
Bangor & Aroostock Railroad

Railstar Corporation

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
Bangor & Aroostock Railroad

Iowa Pacific Holdings, LLC

Iowa Pacific Holdings, LLC

PROJECT DESCRIPTION

Oversee railroad holding company turnaround

 

BACKGROUND

Even well-run holding companies can rise and fall on the strength of the national economy. This successful holding company needed SRF’s assistance to recover from the post-9/11 economic down-turn.

In January 2004, IPH management was concerned that start-up losses and growing accounts payable would come to restrict operations and limit the company’s ability to grow. Unpaid vendors grew impatient, and the company found it difficult to make accurate projections and promises to creditors. While strong business leaders may have an intuitive sense that they can make it work, the challenge is to find the foundation on which to move forward and regain the confidence of lenders, customers, and vendors. Management engaged Strategic Rail Finance to coordinate efforts to stabilize and refinance the entirety of the IPH operation.

 

SRF APPROACH

Strategic Rail Finance evaluated all company assets, operations, expenses, revenues, cash flows, and creditor agreements. SRF then built an accounting system for the company to manage the financial life of the company. This allowed company president, Ed Ellis, to focus on business development. SRF assisted IPH in implementing a new financing plan.

 

RESULTS

  • Identified $360,000 in annual overhead expense savings
  • Facilitated $2.0 million in new business development
  • Refinanced $2.5 million of existing debt
  • Secured $8.1 million in new financing for two rail line acquisitions
Bangor & Aroostock Railroad

New Hope Capital Partners

New Hope Capital Partners

PROJECT DESCRIPTION

Coordinate SBA loan for export receivables

 

BACKGROUND

New Hope Capital Partners, a private equity firm in transportation and supply chain services needed a funding facility to support one of its start-up operations. While the new company was attracting significant overseas customers, the timeline for payment between sourcing in the U.S. and delivery overseas was limiting cash flow and growth. Creating finance approaches for early-stage companies is often a challenge.

 

SRF APPROACH

SRF quickly gained a thorough understanding of the unique strengths and peculiarities of the business. Armed with this grasp of the business and complete confidence in the principals’ abilities, Michael Sussman, president of SRF, worked through his Washington, DC relations at the US Department of Agriculture, Small Business Administration, and U.S. Department of Commerce to rapidly pinpoint both the ideal federally-supported program and the best participating bank for regional administration of the client relationship.

 

RESULTS

  • Arranged $2MM export receivables line of credit
  • Led client directly to the best solution with no time-consuming detours
  • Established the lender’s confidence for lowering years-in-business requirement
  • Created excellent bank relationship for meeting future capital needs