DM&E $2.3 billion loan: A businessman's nirvana
by Leigh Pomeroy
The Minneapolis Star Tribune has opined on the proposed DM&E expansion in the past, and it does so again today, no doubt in response to the lawsuit filed on behalf of the Rochester Coalition and the Mayo Clinic demanding that the Federal Railroad Administration comply with a 10-month-old Freedom of Information Act request asking for the railroad's financial particulars.
If the DM&E were a publicly-held company, all this information would be readily available to anyone who wanted it. But because the DM&E is privately held, it doesn't legally have to tell anyone anything except its owners about its finances and the government about its taxes.
The DM&E wants to remain a privately-held corporation, and that's fine. The only problem is that it wants a huge, publicly-subsidized loan to expand its operations so that it can compete with two larger, publicly-held companies, the Burlington Northern Santa Fe and Union Pacific railroads.
Under CEO Kevin Schieffer, the DM&E wants all the privileges of remaining a privately-held company but also wants all the advantages of taxpayer-funded support. Can he be blamed for wanting the best of all worlds, skimming the cream off the top of both capitalism and socialism?
To achieve this goal is like a businessman's nirvana. It's not just having your cake and eating it too. It's more like owning the restaurant and having the government pay for everyone's meals.
But wait; this happens everyday in Washington, doesn't it?
It's not a question of whether the proposed $2.3 billion loan for the DM&E should or should not be granted. By any objective measurement the idea should have been laughed out of consideration long ago. I can just see the guys in the locker room of the Minnehaha Country Club in Sioux Falls: "Oh, Kevin, that's a good one! Getting the government to loan you $2.3 billion at low interest rates with no collateral! Ho, ho, ho! I wish I could get such a deal for my bank!"
But Washington works in strange ways, which is why after more than a year we're still having to deal with this idiocy. And why ranchers in Wyoming, cities in South Dakota, homeowners in Minnesota and the Mayo Clinic have to spend countless amounts of time and hundreds of thousands of dollars trying to bring the federal government to its senses.
The Minneapolis Star Tribune has opined on the proposed DM&E expansion in the past, and it does so again today, no doubt in response to the lawsuit filed on behalf of the Rochester Coalition and the Mayo Clinic demanding that the Federal Railroad Administration comply with a 10-month-old Freedom of Information Act request asking for the railroad's financial particulars.
If the DM&E were a publicly-held company, all this information would be readily available to anyone who wanted it. But because the DM&E is privately held, it doesn't legally have to tell anyone anything except its owners about its finances and the government about its taxes.
The DM&E wants to remain a privately-held corporation, and that's fine. The only problem is that it wants a huge, publicly-subsidized loan to expand its operations so that it can compete with two larger, publicly-held companies, the Burlington Northern Santa Fe and Union Pacific railroads.
Under CEO Kevin Schieffer, the DM&E wants all the privileges of remaining a privately-held company but also wants all the advantages of taxpayer-funded support. Can he be blamed for wanting the best of all worlds, skimming the cream off the top of both capitalism and socialism?
To achieve this goal is like a businessman's nirvana. It's not just having your cake and eating it too. It's more like owning the restaurant and having the government pay for everyone's meals.
But wait; this happens everyday in Washington, doesn't it?
It's not a question of whether the proposed $2.3 billion loan for the DM&E should or should not be granted. By any objective measurement the idea should have been laughed out of consideration long ago. I can just see the guys in the locker room of the Minnehaha Country Club in Sioux Falls: "Oh, Kevin, that's a good one! Getting the government to loan you $2.3 billion at low interest rates with no collateral! Ho, ho, ho! I wish I could get such a deal for my bank!"
But Washington works in strange ways, which is why after more than a year we're still having to deal with this idiocy. And why ranchers in Wyoming, cities in South Dakota, homeowners in Minnesota and the Mayo Clinic have to spend countless amounts of time and hundreds of thousands of dollars trying to bring the federal government to its senses.
Labels: DM and E
Powered by Blogger
3 Comments:
Objective : A private business uses political clout to obtain government improvements and then afterward successfully sells the business for a handsome profit.
Somehow this business model sounds familiar.
Remove the name DM&E and insert the name Texas Rangers Professional Baseball team.
Read Molly Ivins Shrub : The Short but Happy Political Life of George W. Bush in which she describes how Bush, as the managing partner, got the land to build the Texas Rangers baseball stadium by eminent domain and then the investor group subsequently sold it.
My prediction is that if the deal goes through that Kevin Schieffer and his foreign investors will sell the railroad to BN or UP for a handsome profit which would have not been possible without the taxpayers having provided the means to make a small railroad to be deemed investment worthy.
UP owns the right of first refusal if DM&E goes up for sale as part of the UP takeover of C&NW in 1995. However, Both UP and BNSF have mainlines that parallel the DM&E route. The days of parallel mergers have long passed in to history. Only CP has a route that is not parallel with DM&E and is the only other legitimate option because DM&E interchanges with DM&E at Winona.
However, in light of the continued problems UP is having due to absorbing C&NW, MoPac, SoPac, Missouri Kansas & Texas (the Katy line), Denver & Rio Grande over the last 15 years, and the scaling back of midwest service in favor of UPs west coast operations, I don't think the STB would approve the sale of DM&E to UP, even though UP owne RoFR. CN took over Illinois Central in 1998 and Wisconsin Central in 2000, while CP purchased the remaining stock it owned in the Soo Line in 1992 creating 4 western Class I roads. But, these Class I mega-mergers have led to near unsustainable networks, especially in the midwest, which is why companies like DM&E, Twin Cities & Western and Progressive Rail have thrived. In light of the current state of the rail industry, I am not convinced the STB will allow DM&E to be bought by a Class I road. If DM&E procures its FRA loan, it would make a DM&E purchase even less desirable for a Class I as they would most certainly have to overpay for the property. I think DM&E would make more money in the long term than in the short term which is why they want to expand, in my humble opinion.
finally, a sensible letter writer in the 02/24/2007 star tribune:
[URL]http://www.startribune.com/563/story/1021927.html[/URL]
Post a Comment
<< Home