Rio Grande Wants Quick ICC Review of SP Rail Deal

Rio Grande Industries is expected to ask the Interstate Commerce Commission for an accelerated review of its proposed purchase of the Southern Pacific railroad with the aim of completing the process within six months, officials of SP’s parent firm said Thursday.

Separately, Santa Fe Southern Pacific, parent of SP, said it had filed its plan of divestiture late Wednesday with the ICC for the $1.02-billion sale of one of its two railroads to Rio Grande, Denver-based parent of the much smaller Denver & Rio Grande Western Railroad. Rio Grande also will assume $780 million in Southern Pacific debt.

Rio Grande officials could not be reached Thursday. Rio Grande has 60 days to file with the ICC seeking permission to merge with Southern Pacific. Rio Grande’s goal is to have the ICC review wrap up six months after that date, according to a statement released Thursday by SFSP.

But the ICC has been less than predictable so far. SFSP had expected approval of its application to merge its two railroads--the Southern Pacific and the Santa Fe Railway--after a 15-month review.

Weary of Uncertainty

Instead, the process took 30 months and, in July, 1986, the ICC finally refused to allow the merger, calling it “anti-competitive.” Last June, the commission refused to reconsider its decision and ordered Chicago-based SFSP to sell one of the railroads, which have been operating as separate and competing lines.

“The stock of (Southern Pacific Transportation Co.) has now been held in an independent voting trust for over four years, during which SFSP, SPTCo, their employees and the shipping public have been held in a state of uncertainty,” Robert D. Krebs, SFSP chief executive, said Thursday. “SFSP will make every effort to take whatever action is necessary to facilitate the requisite review by the commission of this plan in order to be in a position to implement divestiture as soon as possible.”

Under the agreement, SFSP will sell Rio Grande the Southern Pacific railroad, and its trucking and other subsidiaries. However, SFSP would retain ownership of a Southern Pacific subsidiary that owns substantial amounts of prime commercial property in California.