RailAmerica begins trading today under symbol “RA”
JACKSONVILLE, Fla. — RailAmerica Inc. said its shares, which begin trading Tuesday, priced at $15 each, raising about $330 million.
The Jacksonville, Fla.-based company runs short line and regional railroads in North America. Last week, the company said it expected to sell about 21 million shares in an initial public offering for $16 to $18 apiece. The company sold 10.5 million shares and an entity affiliated with private-equity firm Fortress Investment Group LLC entity sold 11.5 million shares.
The recent market rally in equities and a sense that investors’ are again ready for IPOs is prompting a number of companies to go public. Investors see transportation companies as an opportunity, because they tend to lead the broader economy out of recession. Most analysts believe that falling transportation demand has bottomed and may soon show signs of an uptick.
“This one should really ride the crest of the competition,” said John Fitzgibbon, of IPOScoop.com, last week.
Fitzgibbon said the shares should attract investors’ attention because it will start trading at the beginning of a sparse week for IPOs.
Fortress, which bought RailAmerica in February 2007, expects to own about 55.8 percent of RailAmerica after the offer closes Friday.
The company’s 40 affiliated railroads operate in 27 states and 3 Canadian provinces with about 7,500 miles of track. They transported over one million carloads of freight for 1,800 customers last year, hauling a variety of products; including farm equipment, food, lumber, paper, metals, chemicals, plastics and coal through relationships with other bigger railroads.
RailAmerica will trade on the New York Stock Exchange under the symbol “RA.”
In a filing with the Securities and Exchange Commission, the company said it believes opportunities to buy assets at good prices are increasing because of tighter credit markets and declining transportation volumes, which give other companies more incentive to sell. It also leaves a limited number of buyers to snatch up asset deals, the company said.
RailAmerica earned $16.5 million last year, with revenue of $508.5 million. In the first six months of this year, the company reported net income of $19.2 million with sales of $206.5 million.
J.P. Morgan Securities Inc., Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Morgan Stanley & Co. Inc. represent underwriters.
Underwriters received a 30-day option for up to 1.6 million additional common shares, and RR Acquisition Holding LLC granted underwriters the option for up to 1.7 million additional shares. The acquisition-holding company is owned by private-equity funds managed by an affiliate of Fortress.
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