FTAI Infrastructure to acquire Wheeling & Lake Erie Railway for $1.05b

NEW YORK - FTAI Infrastructure Inc. (NASDAQ:FIP) announced Wednesday it has agreed to purchase The Wheeling Corporation, owner of the Wheeling & Lake Erie Railway Company (W&LE), for $1.05 billion in cash.

The acquisition target is a Class II regional freight railroad serving over 250 customers along more than 1,000 miles of track across Ohio, Pennsylvania, West Virginia, and Maryland.

According to the press release, FIP has secured $2.25 billion in total capital commitments to finance the transaction, including $1.25 billion in new debt and $1 billion in preferred stock to be purchased by Ares Management funds. InvestingPro data reveals the company already operates with a significant debt burden, with a debt-to-equity ratio of 5.93x and current ratio of 0.86x, suggesting careful monitoring of the additional leverage will be crucial.

"Growing our freight rail platform has been a key focus for FIP," said Ken Nicholson, CEO of FIP. The company expects the combined freight rail segment to generate approximately $200 million of annual Adjusted EBITDA by the end of 2026.

The transaction is expected to close into a voting trust under U.S. Surface Transportation Board rules in the third quarter of 2025, subject to customary closing conditions. FIP anticipates gaining control of W&LE upon receiving STB approval.

The seller is an entity controlled by Larry Parsons, CEO of The Wheeling Corporation, who has led the railroad since 1992.

Simultaneously with the acquisition closing, FIP plans to refinance its existing 10.50% senior notes and Series A preferred stock.

Barclays and Deutsche Bank provided debt commitments and served as financial advisors to FIP. Sidley Austin LLP and Skadden, Arps, Slate, Meagher & Flom LLP acted as legal advisors to the company, while Calfee, Halter & Griswold LLP and Fletcher & Sippel LLC served as legal advisors to W&LE.

In other recent news, FTAI Infrastructure reported its first-quarter 2025 earnings, which exceeded expectations with an earnings per share (EPS) of $0.89, while analysts had projected a loss of $0.36. However, the company did not meet revenue expectations, reporting $96.2 million compared to the forecasted $101.87 million. BTIG analysts responded to the company’s performance by raising the price target for FTAI Infrastructure stock to $10, up from $9, citing significant expected growth in the company’s EBITDA run rate. This growth is partly attributed to the acquisition of the remaining 50% stake in Long Ridge, anticipated to add approximately $60 million in EBITDA this year, along with an additional $30 million in annual capacity reserve payments from PJM.

Furthermore, FTAI Infrastructure successfully priced a $300 million private bond offering, divided into two tranches with maturity dates in 2035 and 2045, featuring interest rates of 6.375% and 6.625% respectively. The bond offering is expected to close by May 28, 2025, pending standard closing conditions. In corporate governance developments, FTAI Infrastructure’s shareholders elected two Class III directors and ratified the appointment of Ernst & Young LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025. These recent developments provide a comprehensive view of FTAI Infrastructure’s ongoing financial and corporate activities.

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