By cvlopez | email@example.com
WILLIAM Brandt, trustee in the San Luis & Rio Grande Railroad bankruptcy case, has set an auction for July and a minimum bid of $5.75 million in his latest effort to sell the assets of the historic freight railroad.
Bids for the railroad have to be submitted by 4 p.m. mountain time on July 10, according to bidding procedures submitted to the U.S. Federal Bankruptcy Court in Denver. If only one qualified bid with the minimum asking price is submitted, that bidder would be seen as the buyer of the short line railroad. If multiple bids are received, which is what Brandt hopes, then an auction with those bidders would be held no later than July 14.
“We set a threshold a little lower than we’d like to try to get interested parties to step up and bid,” Brandt said in a telephone interview Tuesday with AlamosaCitizen.com. “We need to resolve this.”
Freight customers of the railroad, which include Perlite mine in northern New Mexico and Red Hill Lava in Antonito, need assurances that the railroad will continue to operate, Brandt said of the decision to move to a bidding process.
Brandt, who was appointed trustee in December 2019, has insisted throughout his efforts to sell the railroad that any new owner should focus on moving freight. The past owner, in addition to the freight business, also operated passenger excursions to the scenic La Veta Pass. Brandt has been critical of adding the tourist excursions at the expense of the freight business and maintaining the railroad tracks.
The court-appointed trustee said he’s had five separate letters of intent to purchase the railroad but some of the interested parties are still working out their financing to complete a transaction. The bidding procedures and establishing an auction in the event multiple bids are received was a way to move along the Chapter 11 bankruptcy proceeding, he said.
“There’s no shortage of activity regarding people wanting to buy the railroad,” said Brandt.
Brandt filed a June 9 motion with the U.S. Federal Bankruptcy court in Denver outlining the terms of the auction. Any objections to the auction have to be filed with the bankruptcy court by June 23.
Bidders primarily will be vying for ownership of the 155 miles of railroad track that the San Luis & Rio Grande Railroad moves along and operates under the jurisdiction of the Federal Surface Transportation Board.
“The assets to be sold primarily consist of the various pieces of real and personal property used in connection with conducting and maintaining the operations of a freight railroad,” according to the bankruptcy court filing. “These include the trackage, roadbed, ties, other track material, inventory, maintenance-of-way equipment, vehicles, bridges, culverts, signals, stations, depots, yards, storage facilities, buildings, workshops, garage structures, and various other agreements or licenses relating to the real estate located on, along, over and under the SLRG rail lines.”
As trustee, Brandt and his company Development Specialists, Inc. (DSI) have spent money laying new tracks and repairing old ones, as well as cleaning up the railyard to make it more attractive to potential buyers.
Brandt said that because some of the letters of intent have included a higher price than the $5.75 million minimum auction bid, he’s hopeful the railroad will fetch around $7.5 million to $8 million.