Ownership and operations of the Texas State Railroad could change hands within 90 days if a deal is reached between American Heritage Railways and Iowa Pacific Holdings.
Texas State Railroad Authority agreed Thursday to pursue the proposed acquisition of the railroad from current operator AHR to IPH. TSRA President Steve Presley said that the companies have discussed terms for the Chicago-based short line freight and tourist railroad group to take over the cash-strapped TSR. “I would say we’re within 60-90 days of having a closing,” Presley said.
IPH, according to published reports, wants to bring commercial freight operations to the line while maintaining tourist operations. The company is talking to Union Pacific about accessing a 3-mile stretch of line from the Palestine Depot to an interchange point. President Ed Ellis told a local radio station that IPH is interested in creating a transload facility for rail/truck transfer to move oil and timber industry products. IPH owns six railroads in the U.S. – including the Texas-New Mexico Railroad and West Texas & Lubbock Railway – and two lines in Great Britain.
AHR has struggled to make a profit since taking over TSR in 2009, Presley said. AHR President Al Harper made unsuccessful pitches earlier this year for additional funding and forgiveness of $2 million in loans. When AHR took over operations, TSR was losing more than $1 million per year and on the verge of shutdown by the state. Last year, TSR managed to get within $150,000 of break-even by managing costs, like shutting down steam runs from Palestine. But this year, remediation from a 1,000-gallon diesel fuel spill has taken a financial toll.
“AHR had almost gotten it to profitability,” Presley said. “They’ve gotten the railroad back from losing $1.5 million to break even. At this point, they didn’t have the cash flow because of unrelated issues to continue to keep the operation going.”