SFSP Further Details Its Plans for Restructuring

Santa Fe Southern Pacific, the diversified railroad company in the process of restructuring itself, said Tuesday that it will sell stock in its Santa Fe Energy Co., spinoff some real estate and buy back more than a third of its shares.

The company, which said the announcements were part of its plans surrounding the government-required sale of its Southern Pacific railroad, said the share offering for its energy business should be completed by Dec. 31. Up to 20% of the oil and gas subsidiary may be sold.

The company’s directors also authorized creation of a real estate investment trust into which about $300 million of Santa Fe Southern Pacific’s property holdings will be spun off.

Most of the stock of the trust, a financial body managed by investment professionals whose shares can be publicly traded like those of a mutual fund, will be distributed to Santa Fe Southern Pacific shareholders as a special dividend.

The company said the spinoff is likely to take place early next year.

Santa Fe Southern Pacific said its directors also authorized the repurchase of up to 60 million of its 157 million common shares with the money from the sales and from borrowings.

The stock closed Tuesday on the New York Stock Exchange at $56.75 a share, up 50 cents.

On Sept. 3, officials of the Chicago-based firm presented a plan to government regulators to divest itself of part or all of its Southern Pacific railroad operations.

The regulators had forbidden the joining of Southern Pacific, acquired by the company in 1983, and its Atchison Topeka & Santa Fe line on antitrust grounds and ordered the divestiture of Southern Pacific.

Separately, corporate Vice Chairman Alan C. Furth, who is also president of Southern Pacific, announced he will retire Oct. 1. He joined Southern Pacific in 1949.