MERGER VALUATION OF NET LOSS RAILROADS

Unlike unregulated industries where firms with a continuing prospect of net loss cease operations and withdraw their capital from the industry, railroads that operate at a net loss or are bankrupt are forced by the Interstate Commerce Commission to continue running. This consumes their assets and when the equity capital is wiped out, the creditors are in effect subsidizing the operation. The problem of valuing such properties when they are merged as a solution to their negative cash flow situation, is examined in the light of the New Haven, Lehigh Valley and Rock Island. The author notes that many railroads would be worth more if they had fewer assets and that unless disinvestment practices are liberalized there can only be a series of failing railroads in the U.S.

  • Corporate Authors:

    Association of Interstate Commerce Com Practitners

    1112 ICC Building, 12th Street & Constitution Avenue, NW
    Washington, DC  United States  20423
  • Authors:
    • Conant, M
  • Publication Date: 1975-3

Media Info

Subject/Index Terms

Filing Info

  • Accession Number: 00084909
  • Record Type: Publication
  • Files: TRIS
  • Created Date: May 19 1975 12:00AM