Pittsburgh-based United States Steel Corp. says it has agreed to sell its Transtar LLC business unit, which consists of six freight rail lines operating in six different states. Transtar will be sold for $640 million to an affiliate of New York-based Fortress Transportation and Infrastructure Investors LLC (FTAI).
The transaction is expected to close in the third quarter of 2021, says U.S. Steel, subject to closing conditions and regulatory approvals.
U. S. Steel says the sale of Transtar will “align [its] operating focus on its core mining and steelmaking business” by “monetizing a non-core asset.”
The sale includes a 15-year contract for subsequent owners to maintain the existing operations at the six operating railroads that make up Transtar, says U.S. Steel. Those six operating units are: the Gary Railway Company in Indiana; Lake Terminal Railroad Co. in Ohio; Union Railroad Co. LLC in Pennsylvania; Fairfield Southern Co. Inc. in Alabama; Delray Connecting Railroad Co. in Michigan; and the Texas & Northern Railroad Co. in the Lone Star state.
“By selling Transtar to an experienced railroad operator, U. S. Steel can better focus on our broader ‘Best for All’ strategy,” says U. S. Steel President and CEO David B. Burritt. “In addition, the strong partnership we have created with FTAI will ensure continued support of our steelmaking facilities with predictable and cost-effective railroad operations.”
Citi acted as U. S. Steel’s financial advisor on the transaction, while Jones Day and Baker & Miller PLLC acted as its legal advisors.
FTAI, on its website, says it manages a portfolio that as of March 31, 2021, consists of $3.6 billion of transportation-related assets and total equity capital of $1.1 billion.