Governmental investment fund pours over $1 billion to purchase the biggest regional railroad entity in the United States.
FTAI Acquires Wheeling & Lake Erie Railway for $1.05 Billion
FTAI Infrastructure Inc. (NYSE: FIP) has announced its acquisition of the Wheeling & Lake Erie Railway (W&LE), the largest independent regional railroad in the U.S., for $1.05 billion. This strategic move is part of FTAI's focus on expanding its freight rail platform.
The W&LE operates over 1,000 miles of track across Ohio, Pennsylvania, West Virginia, and Maryland, serving more than 250 customers. The deal, which is expected to close in the third quarter of 2025, subject to regulatory approval by the U.S. Surface Transportation Board, will make W&LE an affiliate of Transtar, a company owned by FTAI.
FTAI plans to finance the acquisition through $2.25 billion in total capital commitments. This includes $1.25 billion in new debt and $1 billion in preferred stock purchased by Ares Management funds. The preferred stock will be issued by a newly formed holding company combining Transtar and W&LE.
The acquisition of W&LE presents several opportunities for FTAI. The combined freight rail segment (Transtar + W&LE) is projected to generate about $200 million in annual Adjusted EBITDA by the end of 2026, contributing to a 30% increase in overall company EBITDA to over $450 million.
The integration of W&LE with Transtar offers operating efficiencies and revenue growth through expanded geographic coverage and customer base in the multi-state region. However, the acquisition has increased FTAI's fixed charges by approximately $130 million annually due to debt and preferred stock dividends, leading to near-term profitability and liquidity challenges.
Despite these challenges, FTAI views this as a trade-off for long-term scale and market capture in the $1.2 trillion U.S. freight rail sector. Beyond W&LE, FTAI is pursuing other infrastructure projects and customer diversification efforts to further strengthen its rail and industrial infrastructure platform.
The W&LE handles a variety of goods, including steel, raw materials, aggregates, chemicals, industrial minerals, plastic products, grain and food products, lumber, paper, petroleum products, LPG, and NGL produced in the Marcellus and Utica shale formations. The W&LE connects to Transtar's Union Railroad in the Pittsburgh area.
Norfolk Southern simultaneously leased an additional 121 miles of track to the newly formed W&LE. Since 1992, Wheeling Corp. CEO Larry Parsons has been the driving force behind the rebirth of the W&LE. FTAI is managed by an affiliate of Fortress Investment Group.
In conclusion, the acquisition of the Wheeling & Lake Erie Railway by FTAI represents a transformative investment aimed at expanding and diversifying its freight rail operations with a strong financial growth outlook by 2026, despite near-term integration costs and financial leverage challenges.
Sports enthusiasts may find a break during FTAI's acquisition of Wheeling & Lake Erie Railway, given that the deal offers opportunities for FTAI to focus on other infrastructure projects beyond railroads, as mentioned in the conclusion.
Conversely, the integrated freight rail segment (Transtar + W&LE) could potentially transport a variety of goods, including petroleum products, chemicals, and even grain and food products, which could indirectly impact the agricultural and petrochemical sectors in the multi-state region.
