CSX, NS seek ownership of Conrail subsidiaries - Rail Update - CSX Corp., Norfolk Southern Railway Co., Consolidated Rail Corp - Brief Article

Railway Age, July, 2003

CSX, Norfolk Southern, and Conrail Shared Assets jointly petitioned the Surface Transportation Board last month to acquire direct ownership by CSX and NS of two Conrail subsidiaries they currently manage and operate.

Under operating agreements approved by the STB in 1998, CSX and NS have continued to manage and operate New York Central Lines LLC (NYC) and Pennsylvania Lines LLC (PRR) respectively, both Conrail subsidiaries. The petition, if approved by the STB, would effectively replace the existing agreement and allocate direct ownership to CSX and NS of their respective lines. The transaction is subject to STB approval and an Internal Revenue Service ruling that would qualify it as a non-taxable disposition.

The NYC lines operated by CSX include those running from New York/New Jersey through Albany and Buffalo, N.Y., to East St. Louis, and from Albany to Boston.

The PRR lines operated by NS include those running from New York/New Jersey and Philadelphia through Pittsburgh, and Cleveland to Chicago.

The proposed transaction would benefit both CSX and NS "by improving the clarity of the financial reporting through consolidation of fiscal results of NYC and PRR into those of CSX and NS, respectively." Each Class I "would also have greater independence over the management of the assets of NYC and PRR as direct owners. In addition, Conrail would then be able to restructure its secured public debts, as those associated with the NYC or PRR would become the responsibility of either CSX or NS."