Pittsburgh-based U.S. Steel Corp. (NYSE: X) has announced an agreement to sell its freight rail subsidiary Transtar to New York-based Fortress Transportation and Infrastructure Investors LLC (NYSE: FTAI) in a $640 million deal. Transtar operates six railroads throughout the country, including Gary Railway Co. in northwest Indiana.
The steelmaker says the deal includes a 15-year contract to maintain operations of the railroads. Our partners at The Times of Northwest Indiana report the railroads are used by U.S. Steel and other companies to move raw materials used in the steelmaking process, as well as haul steel within steel plants and to customers.
Gary Railway Co. includes 63 miles of track that provides services to U.S. Steel and four other companies located in the Gary Works complex in Lake County, according to the Transtar website.
“By selling Transtar to an experienced railroad operator, U.S. Steel can better focus on our broader Best for All strategy,” U.S. Steel Chief Executive Officer David Burritt said in a news release. “By monetizing our railroad assets at an implied multiple well above our existing valuation, we create immediate value for our stockholders. In addition, the strong partnership we have created with FTAI will ensure continued support of our steelmaking facilities with predictable and cost-effective railroad operations.”
The “Best for All” strategy, according to The Times, is focused on profitable steel production, while also addressing climate change.
The other railroads involved in the sale include Lake Terminal Railroad Co. in Ohio, Union Railroad Co. in Pennsylvania, Fairfield Southern Co. in Alabama, Delray Connecting Railroad Co. in Michigan and the Texas & Northern Railroad Co. in Texas.
The sale still requires regulatory approval.