SAN Luis & Rio Grande Railroad Trustee William Brandt has a deal with Denver-based OmniTrax to purchase the railroad out of Chapter 11 Bankruptcy Protection, he told Alamosa Citizen on Monday.
OmniTrax is one of the largest privately-held rail companies in North America with $100 million in annual revenue, according to financial reports. It is also the type of freight railroad company Brandt has said he favors handing the historic SLRG over to because of its experience in moving freight and establishing industrial parks along its rail operations.
“This is a major North American rail operator who isn’t going to do this on a shoestring,” said Brandt. “They can write the check. Their level of operation and their reputation in the industry is beyond reproach.”
Brandt wouldn’t disclose the terms of agreement until they are filed in federal bankruptcy court in Denver and a hearing is set to approve the sale. He acknowledged that OmniTrax will pay at least the $5.75 million that was established as a minimum bid for the San Luis & Rio Grande Railroad.
OmniTrax offers the Valley the kind of railroad operator that can potentially grow the freight business and be a strong partner for the Valley counties that have rail operations, Brandt said.
“This railroad is a bit of history and a part of old Colorado, and a part of the true West of mining and agriculture. The San Luis Valley needs this kind of industry and expansion of it to grow and to provide good-paying jobs.”
– Bankruptcy Trustee William Brandt
He said he considers the San Luis Valley a symbol of “old Colorado,” when the railroads literally created towns and helped them flourish through a period of rail boom times. The Valley continues to have a core freight rail business that OmniTrax will be able to support, said Brandt.
“This railroad is a bit of history and a part of old Colorado, and a part of the true West of mining and agriculture,” Brandt said. “The San Luis Valley needs this kind of industry and expansion of it to grow and to provide good-paying jobs.”
OmniTrax hired CEO Dean Piacente in 2021, and he has focused the company on a post-COVID strategy of moving freight to meet the demand of e-commerce businesses like Amazon and other retailers.
“Given that we are coming out of a pandemic, we know there will be great opportunities,” Piacente told Denver Business Journal in an interview published in February 2021 shortly after his arrival in Denver. “It’s fun coming to a company where you have a lot of experiences and diverse backgrounds in a lot of modes of transportation.”
Those opportunities for rail, he said, include transporting paperboard stock used to make boxes from manufacturing plants to companies and shipping centers across the country, and working with retail product companies to deliver new inventory.
Brandt has said that without the San Luis & Rio Grande Railroad, an additional 24,000 truck trips over U.S. 160 and La Veta Pass would be required to handle the freight.
OmniTrax currently operates 21 railroads across the United States. With the San Luis & Rio Grande Railroad it will own another 155 miles of railroad track, including a critical railroad junction at Walsenburg that transfers freight from the Front Range across La Veta Pass and into the Valley and then points south and west.
The sale to OmniTrax must be approved by the U.S. Federal Bankruptcy Court in Denver and by the Surface Transportation Board which oversees the rail industry.
As Brandt has said, “You can’t just buy a railroad.” He’s spent the past two and a half years looking for a suitable buyer for the San Luis & Rio Grande Railroad. He said he’s finally found the match.
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