[Federal Register Volume 65, Number 165 (Thursday, August 24, 2000)]
[Notices]
[Pages 51644-51645]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-21675]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Docket No. MC-F-20940]


Laidlaw Inc. and Laidlaw Transit Acquisition Corp.--Merger--
Greyhound Lines, Inc.

AGENCY: Surface Transportation Board, Department of Transportation.

ACTION: The Board is issuing a supplemental order directing the parties 
to the merger transaction to provide additional information.

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SUMMARY: The Surface Transportation Board (Board) approved the merger 
of Greyhound Lines, Inc. (Greyhound) into Laidlaw Transit Acquisition 
Corp. (LTAC), a wholly owned subsidiary of Laidlaw Inc. (Laidlaw), a 
noncarrier,\1\ under 49 U.S.C. 14303. Laidlaw Inc. and Laidlaw Transit 
Acquisition Corp.--Merger--Greyhound Lines, Inc., STB Docket No. MC-F-
20940 (STB served Dec. 17, 1998), 63 FR 69710 (Dec. 17, 1998).\2\ In a 
recent filing with the Securities and Exchange Commission (SEC), 
Greyhound has indicated that it may not be able to continue operating 
due to financial difficulties related, at least in part, to financial 
problems of Laidlaw. We are directing the parties to the merger to 
provide information that would permit the Board to determine whether 
further action by the Board is necessary. Interested persons will also 
be given an opportunity to comment.
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    \1\ By letter filed with the Board on June 13, 2000, Laidlaw 
advised the Board that Greyhound is now an indirect subsidiary of 
Laidlaw, as Greyhound is a subsidiary of Laidlaw Transportation, 
Inc., a noncarrier controlled by Laidlaw, and not a direct 
subsidiary of Laidlaw as was described and anticipated in the 
application filed in this proceeding in November 1998.
    \2\ The December 17, 1998 order tentatively approved the merger. 
Because no opposing comments were filed, final Board approval became 
effective on February 1, 1999, without a further Board order. See 49 
CFR 1182.5.

DATES: Comments must be filed by September 1, 2000. Replies must be 
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filed September 15, 2000.

ADDRESSES: Send an original and 10 copies of any comments and replies 
referring to STB Docket No. MC-F-20940 to: Surface Transportation 
Board, Office of the Secretary, Case Control Unit, 1925 K Street, N.W., 
Washington, DC 20423-0001.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 565-1600. [TDD for 
the hearing impaired: 1-800-877-8339.]

SUPPLEMENTARY INFORMATION: Under 49 U.S.C. 14303, the Board must 
approve and authorize a proposed merger of intercity bus companies if 
we find the merger to be consistent with the public interest. In 
assessing the public interest, we must consider at a minimum: (1) the 
effect of the proposed merger on the adequacy of transportation to the 
public; (2) the total fixed charges that would result from the merger; 
and (3) the interest of affected carrier employees. 49 U.S.C. 14303(b). 
We may impose conditions governing the merger, id., and issue 
supplemental orders in a

[[Page 51645]]

proceeding ``[w]hen cause exists,'' 49 U.S.C. 14303(j).
    In our December 17, 1998 decision, we found that the LTAC-Greyhound 
merger was consistent with the public interest because, inter alia, at 
3, the applicants had:

assert[ed] that the proposed merger will significantly benefit the 
traveling public, employees, and shareholders, through the 
synergies, efficiencies, and savings that will result from the 
combined resources, skill, and operations of the two complementary 
companies. In this regard, it is anticipated that savings will be 
derived from volume purchases of vehicles, fuel, equipment, and 
services, and from reduced overhead and operating costs related to 
insurance, financing, headquarters, and securities and accounting 
reporting. The combined companies will be better positioned to 
manage equipment utilization, to develop financial and strategic 
plans, and to improve the operations with the goal of enhancing 
service to the public while achieving growth for the company. In 
this regard, Laidlaw's financial strength is expected to assist in 
reducing Greyhound's debt and permit investments for growth while 
improving customer service.

See also Application of Laidlaw, LTAC, and Greyhound at 11-15.
    Recent developments, however, bring these assertions into serious 
question. In a report filed with the SEC for the quarter ending June 
30, 2000 (Form 10-Q at 13), Greyhound stated that its main sources of 
liquidity had been cash flow from operations and funds provided by 
Laidlaw. Greyhound asserts, however, that ``Laidlaw has advised 
[Greyhound] that cash funding, after August 1, 2000, would be limited 
to the cash flow generated by [Greyhound] from its operations and that 
additional funds from Laidlaw would not be available.'' Id. Greyhound 
indicates that Laidlaw has authorized Greyhound to seek additional 
funding from outside sources, and Greyhound has begun seeking such 
financing. ``Should alternative sources not be available or not be 
sufficient to meet [Greyhound's] needs, [Greyhound] may be required to 
curtail or defer non-essential or essential capital and operating 
expenditures and may not be able to satisfy its obligations as they 
become due in the normal course of operations and may not be able to 
continue to operate as a going concern.'' Id. See also Frank Swoboda, 
``Greyhound Seeks Financing Sources,'' Wash. Post, August 16, 2000, at 
E3, and Mark Heinzl, ``Greyhound Says Parent Laidlaw Has Cut Funds,'' 
Wall St. J., August 17, 2000, at B16.
    Greyhound's statements in its recent SEC filing are troubling. Its 
contention that it may not be able to continue to operate due, at least 
in part, to Laidlaw's financial problems appears to contradict the 
assertions made in the merger application that ``synergies'' would 
result from the merger and that Laidlaw's financial strength would be 
used to assist Greyhound. A sudden cessation of operations by Greyhound 
would not appear to be in the public interest. Accordingly, we find 
that cause exists to issue this supplemental order requiring Laidlaw 
and Greyhound to explain the nature of this potential transportation 
crisis and to indicate what future steps can and will be taken. These 
comments will be due by September 1, 2000. Copies of these comments 
will be available on our website at ``WWW.STB.DOT.GOV.'' Replies by 
interested parties may be filed by September 15, 2000. Based on the 
record developed, we will decide whether to impose conditions or take 
some other action in this proceeding.\3\
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    \3\ The Board recently issued a notice tentatively approving 
Laidlaw's acquisition of additional carriers in Laidlaw Inc., et 
al.--Control and Merger--918897 Ontario Inc., B.R. Babcock Limited, 
Babcock Coach Lines Limited, Lee Line Corp., and Lee Charter 
Services, Inc., STB Docket No. MC-F-20972 (STB served July 13, 
2000), 65 FR 43395 (July 13, 2000). Public comments on that proposed 
transaction are currently due on August 28, 2000, but, in light of 
the recent SEC filings, the Board will be issuing a separate 
decision holding up the effectiveness of any approval in that 
proceeding.
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    This decision will not significantly affect either the quality of 
the human environment or the conservation of energy resources.
    It is ordered:
    1. The applicants in this proceeding are directed to submit 
comments in response to this order by September 1, 2000. Interested 
parties may comment or reply by September, 15, 2000.
    2. A copy of this notice will be served on: (1) the U.S. Department 
of Justice, Antitrust Division, 10th Street & Pennsylvania Avenue, 
N.W., Washington, DC 20530; (2) the U.S. Department of Transportation, 
Federal Motor Carrier Safety Administration--HMCE-20, 400 Virginia 
Avenue, S.W., Suite 600, Washington, DC 20024; and (3) the U.S. 
Department of Transportation, Office of the General Counsel, 400 7th 
Street, S.W., Washington, DC 20590.
    3. Notice of this decision will be published in the Federal 
Register.

    Decided: August 18, 2000.

By the Board, Chairman Morgan, Vice Chairman Burkes, and 
Commissioner Clyburn.
Vernon A. Williams,
Secretary.
[FR Doc. 00-21675 Filed 8-23-00; 8:45 am]
BILLING CODE 4915-00-P