[Federal Register Volume 71, Number 241 (Friday, December 15, 2006)]
[Notices]
[Pages 75612-75613]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-21302]


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DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Finance Docket No. 34972]


Fortress Investment Group LLC, et al.--Control Exemption--
RailAmerica, Inc., et al.

    Fortress Investment Group LLC, on behalf of certain private equity 
funds managed by it and its affiliates (Fortress), and RR Acquisition 
Holding LLC (RR Acquisition) (collectively, applicants),\1\ both 
noncarriers, have filed a verified notice of exemption to acquire 
control of RailAmerica, Inc. (RailAmerica), Palm Beach Rail Holding, 
Inc., RailAmerica Transportation Corp., and RailAmerica's 30 freight 
rail carrier subsidiaries located in the United States (RailAmerica 
Railroads).
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    \1\ Fortress is a global investment and asset management firm 
with $26 billion of capital under management. RR Acquisition is 
owned by private equity funds that are managed by Fortress.
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    RailAmerica controls one Class II carrier, the Central Oregon & 
Pacific Railroad, Inc., and the following Class III carriers in the 
United States: Alabama & Gulf Coast Railway LLC, Arizona & California 
Railroad Company, Bauxite & Northern Railway Company, California 
Northern Railroad Company, Cascade and Columbia River Railroad Company, 
The Central Railroad Company of Indiana, Central Railroad Company of 
Indianapolis, Connecticut Southern Railroad, Inc., Dallas, Garland & 
Northeastern Railroad, Inc., Eastern Alabama Railway, Huron & Eastern 
Railway Company, Inc., Indiana & Ohio Railway Company, Indiana Southern 
Railroad, Inc., Kiamichi Railroad LLC, Kyle Railroad Company, Massena 
Terminal Railroad Company, Mid-Michigan Railroad, Inc., Missouri & 
Northern Arkansas Railroad Company, Inc., New England Central Railroad, 
Inc., North Carolina & Virginia Railroad Company, Inc., Otter Tail 
Valley Railroad Company, Point Comfort and Northern Railway Company, 
Puget Sound & Pacific Railroad Company, Rockdale, Sandow & Southern 
Railroad Company, San Diego & Imperial Valley Railroad Company, Inc., 
San Joaquin Valley Railroad Company, South Carolina Central Railroad 
Company, Inc., Toledo, Peoria & Western Railway Corporation, and 
Ventura County Railroad Company.\2\
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    \2\ The RailAmerica Railroads operate in the states of Alabama, 
Arizona, Arkansas, California, Colorado, Connecticut, Florida, 
Illinois, Indiana, Kansas, Massachusetts, Michigan, Minnesota, 
Mississippi, Missouri, Nebraska, New Hampshire, New York, North 
Carolina, Ohio, Oklahoma, Oregon, South Carolina, Texas, Vermont, 
Virginia and Washington.
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    According to applicants, the proposed transaction will be carried 
out through a merger of RailAmerica with a wholly owned subsidiary of 
RR Acquisition (known as RR Acquisition Sub Inc.), with RailAmerica the 
surviving corporation. RailAmerica's shareholders will receive $16.35 
in cash for each share of RailAmerica's common stock. The total value 
of the transaction, including the refinancing of RailAmerica's existing 
debt, is approximately $1.1 billion. Upon completion of the 
transaction, RailAmerica will become a wholly owned subsidiary of RR 
Acquisition, and RR Acquisition and (indirectly) Fortress will thereby 
acquire control of the RailAmerica Railroads. RailAmerica will become a 
privately held company, and its common stock will no longer be publicly 
traded.
    The transaction is scheduled to be consummated during the 1st 
Quarter of

[[Page 75613]]

2007. Under the Board's recently revised rules at 49 CFR 1180.4(g)(1), 
consummation of the transaction may not occur prior to December 31, 
2006, which is 30 days from the date of filing of this notice of 
exemption.\3\
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    \3\ See Public Participation in Class Exemption Proceedings, STB 
Ex Parte No. 659 (STB served Oct. 19, 2006) (Public Participation), 
revising the notice of exemption procedures for certain class 
exemptions, effective for notices filed on or after November 23, 
2006.
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    Applicants state that: (1) The RailAmerica Railroads do not connect 
with each other or any railroads in their corporate family; (2) the 
proposed transaction is not part of a series of anticipated 
transactions that would connect the RailAmerica Railroads with each 
other or any railroad in their corporate family; and (3) the 
transaction does not involve a Class I rail carrier. Therefore, the 
transaction is exempt from the prior approval requirements of 49 U.S.C. 
11323. See 49 CFR 1180.2(d)(2).
    Applicants also state that, because RR Acquisition and Fortress are 
not currently engaged in providing any freight rail transportation 
services, the proposed transaction will not result in any lessening of 
competition or abuse of market power. The purpose of the transaction is 
to promote the investment objectives of Fortress and to improve 
RailAmerica's efficiency, financial strength, and ability to meet the 
needs of shippers.
    Under 49 U.S.C. 10502(g), the Board may not use its exemption 
authority to relieve a rail carrier of its statutory obligation to 
protect the interests of its employees. Because the transaction 
involves the control of one Class II rail carrier and one or more Class 
III rail carriers, the exemption is subject to the labor protection 
requirements of 49 U.S.C. 11326(b).
    If the verified notice contains false or misleading information, 
the exemption is void ab initio. Petitions to revoke the exemption 
under 49 U.S.C. 10502(d) may be filed at any time. The filing of a 
petition to revoke will not automatically stay the effectiveness of the 
exemption. Stay petitions must be filed by December 22, 2006 (at least 
7 days before the exemption becomes effective). See 49 CFR 
1180.4(g)(1)(iii), as recently revised in Public Participation, supra.
    An original and 10 copies of all pleadings, referring to STB 
Finance Docket No. 34972, must be filed with the Surface Transportation 
Board, 1925 K Street, NW., Washington, DC 20423-0001. In addition, one 
copy of each pleading must be served on Terence M. Hynes, Sidley Austin 
LLP, 1501 K Street, NW., Washington, DC 20005, and Louis E. Gitomer, 
Esq., Law Offices of Louis E. Gitomer, 600 Baltimore Avenue, Suite 301, 
Towson, MD 21204.
    Board decisions and notices are available on our Web site at http://www.stb.dot.gov.

    Decided: December 8, 2006.

    By the Board, David M. Konschnik, Director, Office of 
Proceedings.
Vernon A. Williams,
Secretary.
[FR Doc. E6-21302 Filed 12-14-06; 8:45 am]
BILLING CODE 4915-01-P