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Aqua Subsidiary Weighs Paying $3M for Y&S Railroad
EAST LIVERPOOL, Ohio – Aqua Infrastructure LLC, a subsidiary of Aqua America Inc., expects to pay the Columbiana County Port Authority $3 million for the Youngstown & Southern Railroad when it completes its due diligence, a process that should be complete by June 30.
Aqua Infrastructure has agreed to put down a $50,000 refundable deposit in its nonbinding letter of intent. The purchase assumes no surprises that would cause Aqua to back out. It is aware of the environmental concerns the last potential buyer expressed before it backed out.
The board of the port authority met in special session Wednesday to agree to the letter of intent that would give the subsidiary of the largest privately owned water utility in the United States ownership of all assets of the 36-mile short line that runs from Youngstown to Darlington, Pa.
These include the title to all real property and all oil, gas and other mineral rights, the track, rail bed and ties and all rail equipment.
One possibility Aqua Infrastructure is considering is building a pipeline along the path of the railroad that would transmit natural gas.
Between hauling water and sand and the possibility of a pipeline, Aqua ownership would likely reduce the volume of truck traffic on Mahoning and Columbiana County roads. As it has in eastern Pennsylvania, Aqua would “hope to minimize truck traffic” as it has in serving wells in the Marcellus shale, says Vice President Bill Davis.
Davis participated in yesterday’s meeting via speakerphone from Philadelphia. His flight was delayed, precluding his attendance.
Also attending were Jason R. Loree, Boardman Township administrator, and Larry Wilson, Boardman roads superintendent. “Boardman Township is interested in Aqua Infrastructure’s success” in acquiring and running the railroad, Loree said afterward. “Aqua’s been a good neighbor.”
Aqua Infrastructure has the exclusive rights to buy the railroad during the period of due diligence -- the port authority cannot so much as entertain a higher bid, under terms of the letter of intent -- and Aqua's employees cannot discuss what they find with outside parties.
“This letter is an expression of interest only and is not a commitment to purchase the railroad,” Karl M. Kyriss, president of Aqua Infrastructure, points out in the letter of intent.
Bill Davis said his company’s interest in the short line is twofold, first, to haul water and sand used in hydraulic fracturing in the Utica shale, and second, to restore the railroad to its former self and sign customers along the route to use it rather than trucks to supply their needs.
“We’ll be an aggressive manager,” he promised. “We’ll knock on every door we think can use our service. We’ll ask them to think about using it again.”
Aqua Infrastructure has other lines in eastern Pennsylvania that supply water and sand to energy companies engaged in hydraulic fracturing in the Marcellus shale, he noted.
His company’s commitment to the Y&S is not ephemeral, Davis emphasized. “When Aqua buys things, we tend to keep them a long time,” he told the board and reporters. “We have invested a lot of money so far” and, should its due diligence result in a purchase, Davis assured his listeners Aqua would spend considerably more to restore the line.
The Y&S, Davis said drolly, “has experienced deferred maintenance” and so the first focus would be on the roadbed so engines and railroad cars would not be held to slow speeds.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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