Iowa Pacific In Trouble?

J3a-614 · **Posted:** Tue Apr 29, 2014 1:23 am

Sadly it's causing chuckles from the trail crowd.

Equally if not of more importance, what does this portend for all the vintage equipment that's been acquired over the years for the heritage operations, including the revived Pullman service?

http://poststar.com/news/local/most-of- ... _form=true

Rainier Rails · **Posted:** Tue Apr 29, 2014 5:34 am

From reading the article, it would appear that this is in no way a move to dissolve Iowa Pacific or liquidate assets, but to expand the pool of investors to strengthen the company.

Quote:

Iowa Pacific’s senior management will retain the remaining 20 percent of the company...the sale could be good news if it infused the company with cash, as the sale notice seems to indicate.

I don't want to jump to conclusions, but it sounds to me like Ed Ellis and his Pullman cars aren't going anywhere.

Alexander D. Mitchell IV · **Posted:** Tue Apr 29, 2014 8:49 am

I happen to speak to someone with some internal knowledge over this issue over the past weekend, because of some of the same concerns, and he admitted that the whole issue was "complicated," but described it as "basically a debt restructuring."

Take that for as little as it may be worth.

Chris Webster · **Joined:** Sat Aug 25, 2007 12:45 am **Posts:** 1087

Alexander D. Mitchell IV wrote:

the whole issue was "complicated," but described it as "basically a debt restructuring."

The purchasing company is part of billionaire Sam Zell's (wikipedia) company Equity Group Investments (EGI).

According to Forbes, EGI's "specialty has always been opportunistic, often contrarian, long-term investing and active ownership."

Dennis Storzek · **Posted:** Tue Apr 29, 2014 9:44 am

Well, BNSF was sold the other year, and that didn't seem to bring much change.

I suspect the principals are a bit more knowledgeable in corporate finance that most on this list... I would suspect that the railroad, the cars, and the passenger service on Amtrak are all different business entities, and this should have no effect on those.

wesp · **Posted:** Tue Apr 29, 2014 11:20 am

Sam Zell: see also American Classic Voyages (Delta Queen Steamboat Co.) and Chicago Tribune.

Just sayin'.

Heavenrich · **Joined:** Mon Aug 23, 2004 11:07 am **Posts:** 630

My answer is 'not now' -- people like Buffet and Zell don't make investments to lose money and the reporter who wrote the story in the Glen Falls paper should know at least that much.

Bob H

Chris Webster · **Joined:** Sat Aug 25, 2007 12:45 am **Posts:** 1087

Trains magazine columnist Fred Frailey has a blog post about this:
The Ed Ellis Story (continued) [Tue, Apr 29 2014 3:25 PM }

eehiv · **Joined:** Tue Feb 28, 2006 8:54 pm **Posts:** 1336

This is very good for the Iowa Pacific Organization.

Sam Zell is a savvy investor, and traditionally leaves management in place:

http://www.equityinternational.com/cate ... y-country/

I am sure Ed Ellis will still be in charge, and will get the capital he needs to build his business properly. Many other US shortlines have been invested in by the Private Equity industry. This looks like the first railroad investment by Zell.

EH

robertjohndavis · **Joined:** Mon Aug 23, 2004 8:10 am **Posts:** 2499

What ever it is, it is.

I can't help but to root for IPH to stay around for the long term.

I would suggest that any preservation group that cherishes one of the IPH cars get focused on fund raising to be ready if/when the car(s) are no longer needed... Even if that is 30 yrs from now.

Rainier Rails · **Posted:** Wed Apr 30, 2014 5:38 am

From a Trainorders thread on the sale: http://www.trainorders.com/discussion/read.php?4,3394986

Gene Poon wrote:

Fred Frailey, in his Trains.com blog column today, quotes Ed Ellis on the sale of Iowa Pacific Holdings to an investor group led by Sam Zell.

Ed says that Iowa Pacific started with an investment of $18,000 by himself, Howard Clark and some other friends and colleagues. From that it grew, "reinvesting every dollar we earned." After completely refinancing Iowa Pacific for $95 million at the end of 2013, it was time to seek serious equity to grow the company further. Iowa Pacific's bankers referred them to Sam Zell.

Ed says that Zell's people know what the business is about. They inspected it, went over it, know what's making money and what's not. Ed says that Zell's people "will let us continue...They are not afraid to break a few eggs. We’re doing things that ought to be done, to see if they work.'

Here's the link to the blog post Gene Poon is referencing: http://cs.trains.com/trn/b/fred-frailey/archive/2014/04/29/the-ed-ellis-story-continued.aspx

diningcartim · **Joined:** Fri Sep 20, 2013 2:34 pm **Posts:** 197

eehiv wrote:

This looks like the first railroad investment by Zell.

EH

No. He was involved with the Green Bay & Western in the 1980's.

Trainlawyer · **Posted:** Wed Apr 30, 2014 12:13 pm

Amazing how a poorly reported newspaper account of a perfectly reasonable transaction was turned into "He's in trouble", even among people who should have known enough to check first.
GME

The Fireman · **Joined:** Fri Dec 16, 2011 4:44 pm **Posts:** 120

I'll be very interested to see if this accelerates some of the proposals he has for new services.