Firm Conditions Conrail Bid on Approval This Year

Norfolk Southern Corp. will consider withdrawing its offer to buy Conrail if Congress doesn’t approve the sale of the government-owned freight railroad this year, the company’s chairman said today.

Testifying before a House Energy and Commerce subcommittee, Robert Claytor, chairman and chief executive officer, said Norfolk Southern could not afford to tie up its resources indefinitely while Congress evaluates its $1.2-billion bid for Conrail.

“We have said we have until the end of the year to get this through or we will consider going elsewhere,” Claytor said. “When we are devoting 75% to 80% of management time to a transaction, we can only do it for so long.”

Claytor’s remarks followed a statement by Rep. James J. Florio (D-N.J.), who said Congress should not be expected to approve the sale until all loose ends are resolved.

Those loose ends, he said, include Justice Department approval of agreements by Norfolk Southern to divest certain railroad lines, and the reaching of an agreement with Conrail labor over compensation for employee stock holdings.

Of negotiations with Conrail employees, Claytor said, “We cannot agree with labor and labor cannot agree with us.”

During the hearing, Norfolk Southern announced that it has concluded an agreement providing for the transfer of certain lines to Guilford Transportation Industries of New Haven, Conn.

Norfolk Southern said it would sell 1,300 freight cars and 955 miles of railroad to Guilford, and provide track rights over an additional 375 miles for $53 million.

The agreement is subject to Justice Department approval and was made to satisfy government conditions concerning the Conrail sale.