Magazine article American Banker

Banks Line Up for $4B Loan in CSX Deal

Magazine article American Banker

Banks Line Up for $4B Loan in CSX Deal

Article excerpt

Banks were jostling Tuesday to get aboard the latest multibillion dollar consolidation loan to the railroad sector.

CSX Corp. announced a plan to acquire Conrail Inc. for $8.4 billion in a deal that is expected to require a $4 billion bank loan.

Chase Manhattan Corp., BankAmerica Corp., Citicorp, and NationsBank Corp., which already have strong lending ties to the Richmond, Va., rail company, are said to have the inside track to lead the deal.

But analysts said the picture could grow more complicated - and more lucrative for banks - if a bidding war develops for Philadelphia-based Conrail's attractive northeastern track system.

With Norfolk Southern Corp. widely expected to enter a competing bid, the pressure is on CSX to nail down its financing soon.

The situation is reminiscent of the battle for Santa Fe Pacific Railroad, which was bought by Burlington Northern after a bank-financed bidding war with Union Pacific Corp.

Norfolk Southern, a $10.9 billion-asset rail company that serves the southeastern and midwestern United States, said CSX's deal would have "very significant implications for the nation's transportation system."

It said in a statement that it would act "responsibly and aggressively to protect the interests of the shipping industry and its shareholders," but officials declined to say whether a bid for Conrail was in the works.

Norfolk Southern, which has not arranged a major bank financing in recent years, according to Loan Pricing Corp., also declined to comment on its lending relationships.

An acquisition of Conrail would make CSX the biggest railroad in America, surpassing Union Pacific, whose acquisition of Southern Pacific was completed this month. …

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