[Federal Register Volume 62, Number 145 (Tuesday, July 29, 1997)]
[Notices]
[Pages 40566-40567]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-19927]
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DEPARTMENT OF TRANSPORTATION
Surface Transportation Board
[STB Finance Docket No. 32760 (Sub-No. 23)]
Railroad Operation, Acquisition, Construction, Etc.: Union
Pacific Corp, et al.
AGENCY: Surface Transportation Board.
ACTION: Notice that the Board has been requested to issue a finding
that the terms and conditions of the proposed merger of St. Louis
Southwestern Railway Company into SSW Merger Corp. are just and
reasonable.
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SUMMARY: St. Louis Southwestern Railway Company, approximately 99.96%
of the common stock of which is owned by Southern Pacific
Transportation Company, is to be merged into SSW Merger Corp., 100% of
the common stock of which is owned by Southern Pacific Transportation
Company. The merger envisions, among other things, a ``cashing out,''
at a price of $6,800 per share, of the four shareholders who own the
approximately 0.04% of the common stock of St. Louis Southwestern
Railway Company that is publicly held (61 out of 173,300 shares). The
Board has been requested to issue a finding that the terms and
conditions of the merger are just and reasonable.
DATES: Comments must be filed by August 28, 1997. Replies must be filed
by September 12, 1997.
ADDRESSES: All pleadings should refer to STB Finance Docket No. 32760
(Sub-No. 23). Comments (an original and 10 copies) and replies (an
original and 10 copies) should be sent to the Surface Transportation
Board, Office of the Secretary, Case Control Unit, ATTN.: STB Finance
Docket No. 32760 (Sub-No. 23), 1925 K Street, NW., Washington, DC
20423-0001. Comments should also be served (one copy each) on Arvid E.
Roach II, Covington & Burling, 1201 Pennsylvania Avenue, NW., P.O. Box
7566, Washington, DC 20044-7566. Replies should also be served (one
copy each) on the four shareholders who own the 61 publicly held shares
of the common stock of St. Louis Southwestern Railway Company and on
any other persons filing comments.
FOR FURTHER INFORMATION CONTACT: Julia M. Farr, (202) 565-1613. [TDD
for the hearing impaired: (202) 565-1695.]
SUPPLEMENTARY INFORMATION: In Decision No. 44 in Finance Docket No.
32760, Union Pacific Corporation, Union Pacific Railroad Company, and
Missouri Pacific Railroad Company--Control and Merger--Southern Pacific
Rail Corporation, Southern Pacific Transportation Company, St. Louis
Southwestern Railway Company, SPCSL Corp., and The Denver and Rio
Grande Western Railroad Company (UP/SP), we approved the common control
and merger of the rail carriers controlled by Union Pacific Corporation
(Union Pacific Railroad Company and Missouri Pacific Railroad Company)
and the rail carriers controlled by Southern Pacific Rail Corporation
(Southern Pacific Transportation Company, St. Louis Southwestern
Railway Company, SPCSL Corp., and The Denver and Rio Grande Western
Railroad Company).1
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\1\ In UP/SP, Decision No. 44: Union Pacific Corporation was
referred to as UPC; Union Pacific Railroad Company was referred to
as UPRR; Missouri Pacific Railroad Company was referred to as MPRR;
UPRR and MPRR were referred to collectively as UP; Southern Pacific
Rail Corporation was referred to as SPR; Southern Pacific
Transportation Company was referred to as SPT; St. Louis
Southwestern Railway Company was referred to as SSW; SPCSL Corp. was
referred to as SPCSL; The Denver and Rio Grande Western Railroad
Company was referred to as DRGW; SPT, SSW, SPCSL, and DRGW were
referred to collectively as SP; UPC, UP, SPR, and SP were referred
to collectively as ``applicants'; and the application that had been
filed by applicants on November 30, 1995, was variously referred to
as ``the application'' and ``the primary application.''
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The common control authorized in UP/SP, Decision No. 44, was
consummated on September 11, 1996, with the merger of SPR with and into
UP Holding Company, Inc., a direct wholly owned subsidiary of UPC.
In the application filed on November 30, 1995, applicants had
noted, among other things, that, in effectuating UP/SP common control,
they intended to merge SPT, SSW, SPCSL, and DRGW into UPRR, although
they added that these companies might retain their separate existence
for some time. See UP/SP, Decision No. 44, slip op. at 8. With respect
to SSW, applicants specifically noted that, although SSW had a small
number of minority equity holders and although the Federal Railroad
Administration (FRA) held certain SSW redeemable preference shares, the
application did not include a request for a Schwabacher determination
2 with respect to the compensation that might be paid to SSW
security holders in connection with a merger of SSW into UPRR.
Applicants added, however, that, if they later determined to carry out
such a merger, they would request either a Schwabacher determination
respecting the terms of the merger or a declaratory order that no such
determination was
[[Page 40567]]
required. See UP/SP, Decision No. 44, slip op. at 8 n.6 (second
paragraph).
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\2\ The reference is to Schwabacher v. United States, 334 U.S.
192 (1948).
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By petition (designated UP/SP-306) filed July 17, 1997, the
remaining applicants (UPC, UPRR, SPR, SPT, and SSW, hereinafter
referred to simply as ``applicants'') indicate: that MPRR was merged
into UPRR on January 1, 1997; that SPCSL and DRGW were merged into UPRR
on June 30, 1997; that the corporate restructuring of the UP/SP system
will be completed in February 1998 with the merger of SPT into UPRR;
and that, prior to and in anticipation of the merger of SPT into UPRR,
SSW will be merged into SSW Merger Corp. Applicants seek, in the UP/SP-
306 petition, a determination that the terms of the proposed merger of
SSW into SSW Merger Corp. (in particular, the $6,800-per-share price to
be paid to the four shareholders who own the 61 shares of SSW's common
stock that are publicly held) are just and reasonable.3/
Applicants seek this determination (1) because they believe the Board
is required by Schwabacher to make such a determination to protect
minority shareholders, and (2) in order to immunize the merger of SSW
into SSW Merger Corp. from the otherwise applicable state law rights,
particularly the otherwise applicable state law appraisal rights, of
the four remaining public shareholders. 49 U.S.C. 11321(a).
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\3\ Applicants indicate that, prior to and independent of the
merger, the shares of SSW preferred stock that are publicly held
will be redeemed at par value pursuant to their terms. See UP/SP-306
at 1 n.2. Applicants further indicate that they have reached an
agreement with FRA regarding the treatment of the FRA preference
shares, which will remain in existence as obligations of the merged
company. See UP/SP-306 at 3 n.4.
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Applicants urge expedited handling of their petition (in
particular: that we publish notice of their petition in the Federal
Register; that we allow interested persons 30 days to file comments;
that we further allow applicants an additional 15 days to file a reply;
and that we proceed promptly to a decision thereafter). Expedited
handling is sought so that there will be, among other things, no
unnecessary waste of resources associated with the need to maintain a
formal distinction between SSW and the other rail carriers that have
already been merged into UPRR. Applicants indicate that UP/SP will
incur significant costs if it is unable to merge SSW into SSW Merger
Corp. before September 30, 1997; unless that merger is completed before
the end of the fiscal third quarter, applicants note, UP/SP will be
required to go to the considerable time, expense, and difficulty of
preparing financial statements that reflect the operations of SSW as a
separate entity.
Applicants indicate that they are serving a copy of their UP/SP-306
petition ``on all active parties in this proceeding,'' UP/SP-306 at 14
(lines 2-3),4 and that they will serve a copy ``on any known
SSW shareholders,'' UP/SP-306 at 14 (lines 3-4).5
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\4\ This apparently has reference to the parties of record in
the UP/SP oversight proceeding. See the UP/SP-306 certificate of
service (on the unnumbered page following p. 16). See also Union
Pacific Corporation, Union Pacific Railroad Company, and Missouri
Pacific Railroad Company--Control and Merger--Southern Pacific Rail
Corporation, Southern Pacific Transportation Company, St. Louis
Southwestern Railway Company, SPCSL Corp., and The Denver and Rio
Grande Western Railroad Company, STB Finance Docket No. 32760 (Sub-
No. 21) (Decision No. 2, served June 19, 1997; Decision No. 3,
served June 30, 1997; Decision No. 4, served July 16, 1997) (these
decisions list the parties of record in the oversight proceeding).
\5\ We assume that this refers to the four persons listed on the
UP/SP-306 certificate of service (on the unnumbered page following
p. 16).
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Our statutory mandate, 49 U.S.C. 11324(c), requires, among other
things, that we determine, in appropriate cases, that the terms and
conditions of certain transactions affecting stockholders are just and
reasonable. See, e.g., Union Pacific Corp. et al.-- Cont.--MO-KS-TX Co.
et al., 4 I.C.C.2d 409, 515 (1988) (``In appraising this transaction
affecting the rights of stockholders, it is incumbent upon us to see
that the interests of minority stockholders are protected and that the
overall proposal is just and reasonable to those stockholders.
Schwabacher v. United States, 344 U.S.C. at 198, 201.''). Because the
UP/SP-306 petition implicates our statutory mandate and involves a
matter that requires expedited regulatory action, we will proceed upon
the schedule urged by applicants.
Accordingly, we solicit comments from all interested persons
respecting whether the terms and conditions of the proposed merger of
SSW into SSW Merger Corp. are just and reasonable. Such comments must
be submitted by August 28, 1997. Applicants may file replies to such
comments by September 12, 1997.
Any interested person who has not received a copy of the UP/SP-306
petition may request a copy, in writing or by telephone, from Arvid E.
Roach II, Covington & Burling, 1201 Pennsylvania Avenue, NW., P.O. Box
7566, Washington, DC 20044-7566 (telephone: 202-662-5388).
Not later than the fifth day after the date of publication of this
decision, applicants should serve a copy of this decision upon the four
public SSW shareholders and should certify to us: that service of this
decision upon those four persons has been made; and that service of the
UP/SP-306 petition upon such persons, to the extent such service was
not made prior to the date of publication of this decision, has been
made no later than the fifth day after the date of publication of this
decision.
In addition to submitting an original and 10 copies of all
documents filed with the Board, applicants and any commenters are
requested to submit all pleadings and attachments as computer data
contained on a 3.5-inch floppy diskette formatted for WordPerfect 7.0
(or formatted so that it can be converted by WordPerfect 7.0).
Decided: July 22, 1997.
By the Board, Chairman Morgan and Vice Chairman Owen.
Vernon A. Williams,
Secretary.
[FR Doc 97-19927 Filed 7-28-97; 8:45 am]
BILLING CODE 4915-00-P
