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Iowa Northern Railway Company June, 2007

Iowa Northern Railway Company June, 2007. Iowa Northern Railway Company. Formed from liquidated Rock Island main line, incorporated on February 22, 1984 Initial financing from Iowa Railway Finance Authority (IRFA) and Federal Railroad Administration

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Iowa Northern Railway Company June, 2007

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  1. Iowa Northern Railway CompanyJune, 2007

  2. Iowa Northern Railway Company • Formed from liquidated Rock Island main line, incorporated on February 22, 1984 • Initial financing from Iowa Railway Finance Authority (IRFA) and Federal Railroad Administration • Initial majority owners—grain elevators along the line • Sabin and others purchased line in November, 1994 • Sabin bought out other owners in 2005

  3. Iowa Northern survived in the early years only because of Iowa DOT • In exchange for release of right-of-way for I-380 and abandonment of CNW’s Waterloo-Marshalltown line, IANR received approx. $8 million for rehab from Iowa DOT

  4. Critical Steps to Survival • Approximately $2 million in signal and crossing payments from Iowa DOT. • Sale/leaseback of all rail, paying off IRFA mortgage in 1999. • Iowa DOT provided $2 million of loan payoff back to IANR in rehabilitation grant for 50 miles Cedar Falls to Nora Springs. (60-40 match). • Matching funds developed through shipper prepaid freight vouchers.

  5. Critical Steps, cont’d. • $700k earmark from Congressman Latham for safety ties Waterloo to Vinton. • $650k low interest loan from Iowa DOT for rehab Nora Springs to Manly. • $300k assignment of tax credits to contractor to apply to rehab work. • $750k no interest USDA loan to purchase property for new yard at Butler • $25.4 million RRIF loan for major rehab of line between Cedar Rapids and Waterloo, expansion of yard capacity.

  6. Iowa Northern Railway • IANR covers North eastern Iowa with 165 route miles and 700 million bushels of corn within its market area. • IANR currently delivers over one-third of 200 million bushels of corn consumed at Cedar Rapids annually. • Cedar Rapids will need 320 million bushels of corn annually by 2009!

  7. IANR elevators have increased volumes from 230 cars per month in 1994 to 1,500+ cars per month today.

  8. Iowa Northern Railway (IANR) is in the center of the bio-energy revolution.

  9. In 2005, 95 ethanol plants in 19 states produced 4 billion gallons. New construction added another 2 billion gallons in 2006 and again in 2007. By 2011, an estimated 12 billion gallons of ethanol will be produced in the United States. About one-half of this production will be within 300 miles of Manly, Iowa

  10. Iowa Northern Railway (IANR) is rolling toward monumental growth in traffic.

  11. IANR’s first on-line ethanol plant opened in May, 2006, with plant 2 under construction and several more under development. Several bio-diesel plants are expected to be built along the line when feedstock issues are resolved.

  12. How can a short line like Iowa Northern create a solution to more profitability in ethanol and related products? • Loading ethanol on IANR allows plants to effectively access all markets through multiple connections. • Consolidating origin volumes of ethanol allows quicker loading of large unit trains. • Most railroads provide discounts on freight when moving ethanol in unit trains of 75-95 cars per train. • Connecting lines benefit from IANR gathering, consolidating and staging production for unit trains. • Unit trains offers greater turns on tank cars and lower transportation costs. Should save about 3-15 cents per gallon to producers.

  13. Manly Terminal Zephyr-Rocket LLC and LB Transport/ MinnIowa Distribution Services established Manly Terminal LLC on a 50-50 ownership to build a rail-truck ethanol terminal at Manly, Iowa. In May, KAG Ethanol Logistics purchased 30% of Manly Terminal LLC

  14. Manly Terminal will be the largest single ethanol origination point in North America. • Opening initially as a direct truck to rail facility. • Construction of 5 million gallon storage to be completed by May 2007, with expansion up to 20+ million gallon storage expected by 2009. • Expect Manly Terminal to be designated as the “delivery point” for ethanol for CBOT futures trading. • Will handle a billion gallons by end of 2010, consolidating with more than 500 million gallons produced along IANR.

  15. IANR will rebuild 1,000+ car capacity yard adjacent to Manly Terminal and a 1,000 car capacity yard in Butler County. • Manly Terminal will consolidate ethanol at one point for delivery, exchange, transfers trading and arbitrage of product between the ethanol companies. • Will provide a safety valve for expected additional production capacity. • Will provide greater ease and security in ethanol futures trading. • By 2010, Iowa Northern will generate the equivalent of a unit train every 16-24 hours for delivery to the Class I carriers and all emerging markets.

  16. With multiple rail connections, IANR Provides all Necessary Outlets to Every Market • Western-Southwestern Markets via IC&E-KCS, UP and BNSF. • Eastern Markets via IC&E, UP, IAIS and CN to NS, CP and CSX. • Meeting the needs of larger connecting carriers by building solid unit trains. • Non-discriminatory rates to every connection.

  17. Manly Terminal is identifying 20+ destination facilities--nationwide to handle unit trains of ethanol.

  18. Manly IANR Rural Industrial Development Nora Springs IC&E Butler County Oelwein Waterloo Canadian National Benton County Union Pacific Cedar Rapids

  19. The new support yard has already attracted nearly $1 billion in additional industrial investment.

  20. IANR participates in rail infrastructure investment by rail shippers. • Shippers provide funds to increase their rail capacity. • IANR reimburses the shipper on each car shipped until repaid. • IANR provides freight rate discount for hauling corn to ethanol plants in returning ddg cars.

  21. The increased planting of corn will require considerably more fertilizer to transport. Two large fertilizer terminals are along the line with 2 more expected over the next 2 years.

  22. IANR is developing a major machinery mixing center to make Iowa machinery manufacturers more competitive

  23. Coal will become a major commodity moved on IANR • Cedar Falls Utilities will be expanding their energy production with large unit trains from Union Pacific. • LS Power is building an 800 KW plant near Waterloo, to be served by IANR with 25,000+ carloads of coal.

  24. In support of the Mells Industries Corn Stover plant, 8-10 new sites for stover origination will be built along IANR

  25. Wind Energy Components & Corridor • Plan on a wind turbine component terminal at Manly and/or Butler • Working on IANR hosting a 150 mile linear wind farm, transmission lines and communication towers. • Major industrial development corridor the whole length of the railroad.

  26. Expected Iowa Northern Railway Growth from 20,000 to 200,000 carloads in 12 years

  27. What will challenge Iowa Northern to achieve these ambitious goals?

  28. Capital Spending Iowa Northern, Manly Terminal and related customers will be spending nearly $125 million in additional rail logistics capacity on IANR over the next five years!

  29. IANR Capital Spending between 2000 and 2013 will exceed $93 million

  30. Increased Yard and Side Track Capacity

  31. Expanded Shop Capacity

  32. More tonnage can be handled with more power on existing trains

  33. More locomotives being purchased IANR will have 21 locomotives on line by 43rd Quarter, 2007 with plans to purchase 20 more over the next three years.

  34. Thanks!!

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