IC&E COMPLETES PURCHASE OF I&M RAIL LINK

IC&E COMPLETES PURCHASE OF I&M RAIL LINK    A new regional, Class II railroad entity has been created in the U.S. Midwest with Iowa Chicago & Eastern Railroad Corp.'s acquisition of the 1,700-mile I&M Rail Link LLC.
   Although IC&E is the purchaser, the deal combines the IC&E with the 1,103-mile Dakota, Minnesota & Eastern Railroad Corp. (DM&E).
   The Iowa Chicago & Eastern Railroad (IC&E) and the DM&E will continue to operate under their own names. The new entity formed by their combination will not have a name of its own, but will come under the common management of Cedar American Rail Holdings, Inc.
   A wholly owned subsidiary of DM&E, Cedar American holds 100 percent of IC&E’s stock.
   Marie Ali, a spokesperson for Houlihan Lokey Howard & Zukin, an international investment bank that served as financial advisor for the purchase, told AS+ that the complex terms of the acquisition reflected a “long and difficult” process to obtain financing and regulatory approval that began in 2000.
   As part of negotiations that concluded July 26, IC&E will operate in five states: Minnesota, Iowa, Illinois, Missouri, and Wisconsin. DM&E will operate in South Dakota and Minnesota, with extensions into Wyoming, Nebraska, and Iowa.
   I&M Rail Link LLC, was formed in 1997 to acquire certain lines and assets of Soo Line Railroad Corp., a subsidiary of Canadian Pacific.
   I&M Rail Link comprised two distinct systems: “the Main Line” linking Chicago, Minneapolis-St. Paul, and Kansas City, and “the Corn Line,” serving farming communities in northern Iowa and southern Minnesota.
   Cedar American will be based in Sioux Falls, S.D. DM&E will retain a corporate office in Brookings, S.D.
   IC&E will keep operational offices in the “Quad Cities”: Moline and Rock Island, Ill., and Davenport and Bettendorf, Iowa.
   The financing of the deal consisted of a senior credit facility, subordinated notes, and redeemable preferred stock, according to a statement from Houlihan Lokey.