Word: conrail
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...railroad for sale? It may sound like a game of Monopoly, but the Department of Transportation last week was taking bids for the Consolidated Rail Corp. Created in 1976 from the Penn Central and five other bankrupt railroads, Conrail required a $7 billion federal transfusion through 1982. Under the stewardship of Chairman L. Stanley Crane, Conrail earned a profit in 1983 of $313 million. When DOT tried to peddle Conrail to 20 firms last spring, the only offer came from the company's employees, who already own 15% of the road. But last week 14 bidders stepped forward...
...bids ranged from $7.6 billion from First Allied, a group of investors led by Malcolm I. Glazer, to $1 from Tippecanoe Warehousing, a storage and transportation firm that wants to use Conrail in a complex tax deal. Hotelier J.W. Marriott Jr. and Guilford Transportation Industries, owned by Timothy Mellon of the Pittsburgh Mellon family, also made proposals. Transportation Secretary Elizabeth Dole will select the winning bid, possibly later this summer, after discussions with Congress and Goldman, Sachs, DOT'S financial adviser...
...conceding that "it's time now for me to go," intends to retire, and Schmidt will run the new corporation from Chicago. An ambitious executive who grew up in a blighted Chicago neighborhood and once sold peanuts, baby pictures and encyclopedias, Schmidt is considering an effort to buy Conrail, the big Government-owned Eastern system, and link it to the Southern Pacific and the Santa Fe. That grand plan would put Schmidt in charge of the largest U.S. railroad and the first transcontinental line owned by a single company. -By Charles P. Alexander. Reported by Lee Griggs/Chicago and Russell...
Much of the credit for Conrail's resurgence goes to Chairman Crane, 67, who took over the line in 1981 after spending nearly his entire career at the Southern Railway, the last three years as president. A short, wiry expert in operations, Crane charged up employees with a sense of purpose and firmly established company goals...
Thanks to Conrail's impressive recovery, it is expected to show a profit of about $1 billion over the next five years. One interested buyer is a group of the railroad's employees, who say they plan to make a bid by June 14. But whatever price the Government gets for Conrail, it will not match the $7 billion investment...