Dakota, Minnesota & Eastern Railroad

Business Description

Dakota, Minnesota & Eastern Railroad Corporation ("DM&E") is one of the largest regional railroads in the United States servicing high volume shippers principally in South Dakota and Minnesota. The DM&E mainline runs east from Rapid City, South Dakota, to the Mississippi River along the Minnesota/Wisconsin border. Now combined with the I&M Rail Link (the "IMRL"), the DM&E railroad provides customers with access to major shipping hubs, namely Chicago and Kansas City. The core commodities handled by the company include grain and grain products, clay, coal, metal products, and cement.

Transaction Overview

Mezzanine financing was used to help finance the IMRL acquisition.

In addition, the funds were also used to refinance existing debt and to provide for future capital expenditures

Exit Strategy

DM&E successfully integrated the IMRL business following regulatory approval. The business performed according to plan with expected synergies materializing as expected.

In December 2003, the Federal Railroad Administration provided the company with a loan and the mezzanine debt was subsequently repaid.