Dow sells rail assets to transportation services company Watco
Watco is acquiring the rail infrastructure assets and related equipment at Dow's locations in Freeport and Seadrift, Texas; St. Charles and Plaquemine, Louisiana; and Fort Saskatchewan and Prentiss in Alberta, Canada.
Olefins and polyethylene manufacturer Dow Inc. is selling its rail infrastructure assets and related equipment at six major North American sites – two of them in Canada – to Watco Companies, a Pittsburg, Kansas-based transportation service company.
In a statement, Midland, Mich.-based Dow said that it expects to receive cash proceeds in excess of US$310 million as part of the transaction.
Watco will provide select rail services at Dow’s flagship locations in Freeport and Seadrift, Texas; St. Charles and Plaquemine, Louisiana; and Fort Saskatchewan and Prentiss in Alberta, Canada.
“[This] announcement is part of an on-going review of our ownership of non-product producing assets and is driven by our commitment to apply a best-owner mindset to everything we do,” said Jim Fitterling, chairman and CEO of Dow. “It aligns to Dow’s strategy to continue to grow our core businesses in a capital-efficient manner. The transaction will liberate cash from our balance sheet that we will use to pay down debt and invest in our core value-generating businesses.”
Dow also said that it “expects Watco’s significant rail expertise and capabilities will deliver additional operational efficiencies and opportunities for growth over time.”
The transaction is expected to close in the fourth quarter of 2020. Fourteen Dow employees and management of approximately 400 contract workers are expected to transition to Watco upon close of the transaction.