The state of Georgia plans a $35 million sale of bonds to upgrade its rail network, a move that could help boost volumes for Genesee & Wyoming (NYSE: GWR) and other short-line operators in the state.
The State Transportation Board approved the sale at a May 16 meeting. Georgia’s Department of Transportation (DOT) hopes to sell the 20-year bonds, which carry a 6.5 percent coupon, in June.
The funding, the state’s largest ever for rail freight, will go to upgrading state-owned rail lines up to Class II standards. That allows train speeds up to 25 miles per hour and car loadings up 286,000 pounds. Georgia owns some 490 miles of short-line rail rights-of-way throughout the state.
The upgrade is to help reduce truck traffic on state highways, the DOT said.
The largest funding piece, $13.5 million, goes to upgrades along parts of the 249-mile Heart of Georgia rail line. Genesee & Wyoming owns the short-line railroad that runs on the line.
Among other projects getting funded are a $6 million upgrade to track and bridges along the 102-mile Georgia Southwestern rail line.
According to the Georgia DOT, the line carried 2,600 carloads in 2018. Genesee & Wyoming also owns the five short-line railroads that run on or connect with the Southwestern line.
The Southwestern line also connects to the Port of Savannah with a CSX (Nasdaq: CSX) interchange in Bainbridge.
Other Genesee & Wyoming rail lines receiving funding are the Chattooga and Chickamauga Railway, which is receiving $5 million in upgrades.
Patriot Rail’s Georgia Northeastern Rail Road is receiving $1.5 million in funding upgrades. The Ogeechee Railroad will get $3 million in funding. CaterParrott Railnet, which runs on the 43-mile Georgia-Florida line, will receive $6 million in funding.