[Federal Register Volume 62, Number 145 (Tuesday, July 29, 1997)]
[Notices]
[Pages 40566-40567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19927]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board
[STB Finance Docket No. 32760 (Sub-No. 23)]


Railroad Operation, Acquisition, Construction, Etc.: Union 
Pacific Corp, et al.

AGENCY: Surface Transportation Board.

ACTION: Notice that the Board has been requested to issue a finding 
that the terms and conditions of the proposed merger of St. Louis 
Southwestern Railway Company into SSW Merger Corp. are just and 
reasonable.

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SUMMARY: St. Louis Southwestern Railway Company, approximately 99.96% 
of the common stock of which is owned by Southern Pacific 
Transportation Company, is to be merged into SSW Merger Corp., 100% of 
the common stock of which is owned by Southern Pacific Transportation 
Company. The merger envisions, among other things, a ``cashing out,'' 
at a price of $6,800 per share, of the four shareholders who own the 
approximately 0.04% of the common stock of St. Louis Southwestern 
Railway Company that is publicly held (61 out of 173,300 shares). The 
Board has been requested to issue a finding that the terms and 
conditions of the merger are just and reasonable.

DATES: Comments must be filed by August 28, 1997. Replies must be filed 
by September 12, 1997.

ADDRESSES: All pleadings should refer to STB Finance Docket No. 32760 
(Sub-No. 23). Comments (an original and 10 copies) and replies (an 
original and 10 copies) should be sent to the Surface Transportation 
Board, Office of the Secretary, Case Control Unit, ATTN.: STB Finance 
Docket No. 32760 (Sub-No. 23), 1925 K Street, NW., Washington, DC 
20423-0001. Comments should also be served (one copy each) on Arvid E. 
Roach II, Covington & Burling, 1201 Pennsylvania Avenue, NW., P.O. Box 
7566, Washington, DC 20044-7566. Replies should also be served (one 
copy each) on the four shareholders who own the 61 publicly held shares 
of the common stock of St. Louis Southwestern Railway Company and on 
any other persons filing comments.

FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1613. [TDD 
for the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: In Decision No. 44 in Finance Docket No. 
32760, Union Pacific Corporation, Union Pacific Railroad Company, and 
Missouri Pacific Railroad Company--Control and Merger--Southern Pacific 
Rail Corporation, Southern Pacific Transportation Company, St. Louis 
Southwestern Railway Company, SPCSL Corp., and The Denver and Rio 
Grande Western Railroad Company (UP/SP), we approved the common control 
and merger of the rail carriers controlled by Union Pacific Corporation 
(Union Pacific Railroad Company and Missouri Pacific Railroad Company) 
and the rail carriers controlled by Southern Pacific Rail Corporation 
(Southern Pacific Transportation Company, St. Louis Southwestern 
Railway Company, SPCSL Corp., and The Denver and Rio Grande Western 
Railroad Company).1
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    \1\ In UP/SP, Decision No. 44: Union Pacific Corporation was 
referred to as UPC; Union Pacific Railroad Company was referred to 
as UPRR; Missouri Pacific Railroad Company was referred to as MPRR; 
UPRR and MPRR were referred to collectively as UP; Southern Pacific 
Rail Corporation was referred to as SPR; Southern Pacific 
Transportation Company was referred to as SPT; St. Louis 
Southwestern Railway Company was referred to as SSW; SPCSL Corp. was 
referred to as SPCSL; The Denver and Rio Grande Western Railroad 
Company was referred to as DRGW; SPT, SSW, SPCSL, and DRGW were 
referred to collectively as SP; UPC, UP, SPR, and SP were referred 
to collectively as ``applicants'; and the application that had been 
filed by applicants on November 30, 1995, was variously referred to 
as ``the application'' and ``the primary application.''
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    The common control authorized in UP/SP, Decision No. 44, was 
consummated on September 11, 1996, with the merger of SPR with and into 
UP Holding Company, Inc., a direct wholly owned subsidiary of UPC.
    In the application filed on November 30, 1995, applicants had 
noted, among other things, that, in effectuating UP/SP common control, 
they intended to merge SPT, SSW, SPCSL, and DRGW into UPRR, although 
they added that these companies might retain their separate existence 
for some time. See UP/SP, Decision No. 44, slip op. at 8. With respect 
to SSW, applicants specifically noted that, although SSW had a small 
number of minority equity holders and although the Federal Railroad 
Administration (FRA) held certain SSW redeemable preference shares, the 
application did not include a request for a Schwabacher determination 
2 with respect to the compensation that might be paid to SSW 
security holders in connection with a merger of SSW into UPRR. 
Applicants added, however, that, if they later determined to carry out 
such a merger, they would request either a Schwabacher determination 
respecting the terms of the merger or a declaratory order that no such 
determination was

[[Page 40567]]

required. See UP/SP, Decision No. 44, slip op. at 8 n.6 (second 
paragraph).
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    \2\ The reference is to Schwabacher v. United States, 334 U.S. 
192 (1948).
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    By petition (designated UP/SP-306) filed July 17, 1997, the 
remaining applicants (UPC, UPRR, SPR, SPT, and SSW, hereinafter 
referred to simply as ``applicants'') indicate: that MPRR was merged 
into UPRR on January 1, 1997; that SPCSL and DRGW were merged into UPRR 
on June 30, 1997; that the corporate restructuring of the UP/SP system 
will be completed in February 1998 with the merger of SPT into UPRR; 
and that, prior to and in anticipation of the merger of SPT into UPRR, 
SSW will be merged into SSW Merger Corp. Applicants seek, in the UP/SP-
306 petition, a determination that the terms of the proposed merger of 
SSW into SSW Merger Corp. (in particular, the $6,800-per-share price to 
be paid to the four shareholders who own the 61 shares of SSW's common 
stock that are publicly held) are just and reasonable.3/ 
Applicants seek this determination (1) because they believe the Board 
is required by Schwabacher to make such a determination to protect 
minority shareholders, and (2) in order to immunize the merger of SSW 
into SSW Merger Corp. from the otherwise applicable state law rights, 
particularly the otherwise applicable state law appraisal rights, of 
the four remaining public shareholders. 49 U.S.C. 11321(a).
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    \3\ Applicants indicate that, prior to and independent of the 
merger, the shares of SSW preferred stock that are publicly held 
will be redeemed at par value pursuant to their terms. See UP/SP-306 
at 1 n.2. Applicants further indicate that they have reached an 
agreement with FRA regarding the treatment of the FRA preference 
shares, which will remain in existence as obligations of the merged 
company. See UP/SP-306 at 3 n.4.
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    Applicants urge expedited handling of their petition (in 
particular: that we publish notice of their petition in the Federal 
Register; that we allow interested persons 30 days to file comments; 
that we further allow applicants an additional 15 days to file a reply; 
and that we proceed promptly to a decision thereafter). Expedited 
handling is sought so that there will be, among other things, no 
unnecessary waste of resources associated with the need to maintain a 
formal distinction between SSW and the other rail carriers that have 
already been merged into UPRR. Applicants indicate that UP/SP will 
incur significant costs if it is unable to merge SSW into SSW Merger 
Corp. before September 30, 1997; unless that merger is completed before 
the end of the fiscal third quarter, applicants note, UP/SP will be 
required to go to the considerable time, expense, and difficulty of 
preparing financial statements that reflect the operations of SSW as a 
separate entity.
    Applicants indicate that they are serving a copy of their UP/SP-306 
petition ``on all active parties in this proceeding,'' UP/SP-306 at 14 
(lines 2-3),4 and that they will serve a copy ``on any known 
SSW shareholders,'' UP/SP-306 at 14 (lines 3-4).5
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    \4\ This apparently has reference to the parties of record in 
the UP/SP oversight proceeding. See the UP/SP-306 certificate of 
service (on the unnumbered page following p. 16). See also Union 
Pacific Corporation, Union Pacific Railroad Company, and Missouri 
Pacific Railroad Company--Control and Merger--Southern Pacific Rail 
Corporation, Southern Pacific Transportation Company, St. Louis 
Southwestern Railway Company, SPCSL Corp., and The Denver and Rio 
Grande Western Railroad Company, STB Finance Docket No. 32760 (Sub-
No. 21) (Decision No. 2, served June 19, 1997; Decision No. 3, 
served June 30, 1997; Decision No. 4, served July 16, 1997) (these 
decisions list the parties of record in the oversight proceeding).
    \5\ We assume that this refers to the four persons listed on the 
UP/SP-306 certificate of service (on the unnumbered page following 
p. 16).
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    Our statutory mandate, 49 U.S.C. 11324(c), requires, among other 
things, that we determine, in appropriate cases, that the terms and 
conditions of certain transactions affecting stockholders are just and 
reasonable. See, e.g., Union Pacific Corp. et al.-- Cont.--MO-KS-TX Co. 
et al., 4 I.C.C.2d 409, 515 (1988) (``In appraising this transaction 
affecting the rights of stockholders, it is incumbent upon us to see 
that the interests of minority stockholders are protected and that the 
overall proposal is just and reasonable to those stockholders. 
Schwabacher v. United States, 344 U.S.C. at 198, 201.''). Because the 
UP/SP-306 petition implicates our statutory mandate and involves a 
matter that requires expedited regulatory action, we will proceed upon 
the schedule urged by applicants.
    Accordingly, we solicit comments from all interested persons 
respecting whether the terms and conditions of the proposed merger of 
SSW into SSW Merger Corp. are just and reasonable. Such comments must 
be submitted by August 28, 1997. Applicants may file replies to such 
comments by September 12, 1997.
    Any interested person who has not received a copy of the UP/SP-306 
petition may request a copy, in writing or by telephone, from Arvid E. 
Roach II, Covington & Burling, 1201 Pennsylvania Avenue, NW., P.O. Box 
7566, Washington, DC 20044-7566 (telephone: 202-662-5388).
    Not later than the fifth day after the date of publication of this 
decision, applicants should serve a copy of this decision upon the four 
public SSW shareholders and should certify to us: that service of this 
decision upon those four persons has been made; and that service of the 
UP/SP-306 petition upon such persons, to the extent such service was 
not made prior to the date of publication of this decision, has been 
made no later than the fifth day after the date of publication of this 
decision.
    In addition to submitting an original and 10 copies of all 
documents filed with the Board, applicants and any commenters are 
requested to submit all pleadings and attachments as computer data 
contained on a 3.5-inch floppy diskette formatted for WordPerfect 7.0 
(or formatted so that it can be converted by WordPerfect 7.0).

    Decided: July 22, 1997.

    By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.
[FR Doc 97-19927 Filed 7-28-97; 8:45 am]
BILLING CODE 4915-00-P