Santa Fe Files Divestiture Plan For Southern Pacific
CHICAGO (AP) _ Santa Fe Southern Pacific Corp. will consider allowing employees to buy its Southern Pacific Transportation Co. as one of four possible plans to divest itself of the railroad, the company announced Friday.
Santa Fe made its announcement in filing a divestiture plan with the Interstate Commerce Commission, which ordered the formulation of a plan in June. The company will retain its other railroad, the Atchison, Topeka and Santa Fe Railway, according to a company statement.
Santa Fe will begin taking bids in mid-September for the 136-year-old railroad, said spokeswoman Cathy Westphal at company headquarters in Chicago.
She said company investment bankers have already begun compiling data on the company for bidders in an effort to speed up the process.
We ″believe it is in the best interest of all concerned to accomplish the divestiture as soon as possible,″ said Santa Fe president Robert D. Krebs in a statement. ″Our goal is to adopt and, if possible, implement the plan by the end of the year.″
The move to sell Southern Pacific comes after a failed three-year attempt to combine Southern Pacific and Santa Fe to create the nation’s second-largest railroad.
In June, the Interstate Commerce Commission turned down Santa Fe’s appeal to reconsider its rejection of the merger.
The commission ordered the company to submit a plan to sell one or both railroads by Sept. 28.
Besides a possible sale to employees, the company said options in the divestiture plan for Southern Pacific include:
-Selling Southern Pacific to another railroad or a non-railroad company;
-Spinning off the railroad shares to Santa Fe Southern Pacific Corp. shareholders and making the railroad an independent, publicly held corporation with stock traded on the open market;
-Selling major parts of Southern Pacific to other railroads that are in a position to provide extended single-line service to shippers. Possible buyers include the Denver and Rio Grande Western Railroad Co. and the Kansas City Southern Railroad, according to the statement.
Ms. Westphal would not say which option the company preferred.
Southern Pacific’s value is estimated between $600 million to $1 billion.