RailAmerica Completes Acquisition of Four Short Line Railroads from Alcoa

Business Wire, Oct 3, 2005

BOCA RATON, Fla. -- RailAmerica, Inc. (NYSE:RRA) today announced the completion of its acquisition of four short line railroads from Alcoa for a purchase price of $77.5 million in cash. The cash purchase price is based on RailAmerica assuming a targeted working capital deficit. RailAmerica funded substantially all of the cash purchase price through a $75 million increase in the term loan portion of its existing senior secured credit facility.

The four railroads acquired serve Alcoa aluminum manufacturing operations in Texas and New York and a former Alcoa owned specialty chemicals facility in Arkansas. For the twelve months ended June 30, 2005, the four railroads handled 30,000 carloads, generated revenue of $20.8 million, resulting in operating income of $10.1 million and had depreciation and amortization expense of $0.2 million. The four railroads, which operate a total of 25 miles, had capital expenditures of $50,000 for the twelve months ended June 30, 2005.

RailAmerica has agreed to acquire the stock of the railroads under Section 338(h) (10) of the Internal Revenue Code and will therefore benefit from the stepped-up tax basis of the assets.

Charles Swinburn, Chief Executive Officer of RailAmerica said, "We are pleased to have these four railroads and the dedicated employees who serve them join RailAmerica. In addition to a well maintained asset base and excellent customers, the railroads have a history of strong cash flow generation. RailAmerica expects that the transaction will be accretive in the first year."

RailAmerica, Inc. (NYSE:RRA) is a leading short line and regional rail service provider with 47 railroads operating approximately 8,875 miles in the United States and Canada. The Company is a member of the Russell 2000(R) Index. Its website may be found at http://www.railamerica.com.

DISCLAIMER REGARDING FORWARD-LOOKING STATEMENTS: This press release contains forward-looking statements regarding future events that involve risks and uncertainties that could cause actual results to differ materially. Forward-looking statements speak only as of the date the statement was made. The Company assumes no obligation to update forward-looking information to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information. If the Company does update any forward-looking statement, no inference should be drawn that the Company will make additional updates with respect to that statement or any other forward-looking statements. We refer you to the documents that RailAmerica files from time to time with the Securities and Exchange Commission, such as the Form 10-K, Form 10-Q and Form 8-K, which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release.