3i/Regional Rail Acquiring CCET (UPDATED 7/3)

(Map Courtesy Cincinnati Eastern Railroad/CCET)

Cincinnati Eastern Railroad (CCET) has been added to the portfolio of Regional Rail, a Kennett Square, Pa.-based short line holding company backed by 3i.

Class III CCET had leased approximately 69.45 miles of rail line in Ohio from Norfolk Southern (NSR); it runs from Cincinnati (Mariemont) to Peebles, Ohio, with a connection to NSR in Cincinnati (Mariemont) via Clare yard. Among its customers: Trinity Industries, Koppers, Winchester AG Services Inc., Cohen Recycling, and Pilot Chemical Company.  

CCET and Paul Didelius, who previous controled CCET and who also owns Rainier Rail, reached an agreement to sell CCET to 3i RR Holdings GP LLC et al. and Regional Rail, LLC (3i/Regional Rail), according to Surface Transportation Board (STB) decisions filed in June (download below). Since partnering in July 2019, 3i and Regional Rail have grown from three railroads in the Northeastern United States to 16 freight railroad operations across North America.

“Didelius and CCET I state that to accommodate certain corporate and tax considerations in connection with … [this] transaction, CCET I will undergo a reorganization immediately prior to its sale to 3i/Regional Rail,” according to the STB. “The owners of CCET I have formed CCET Holding, Inc. (CCET Holding), which will assume direct ownership of CCET I. CCET II will be formed as a separate, noncarrier subsidiary of CCET Holding, and CCET I will be merged with and into CCET II, with CCET II as the surviving corporation, becoming a Class III rail carrier controlled indirectly by Didelius. The parameters of its lease operations in Ohio will be identical to those of CCET I. CCET II, in turn will be the rail carrier acquired by 3i/Regional Rail pursuant to the concurrently filed notice of exemption in 3iRR Holding GP LLC—Control Exemption—Cincinnati Eastern Railroad, Docket No. FD 36783. In that proceeding, 3i/Regional Rail seek to obtain control of CCET II. Didelius and CCET I state that the agreement between CCET I and CCET II that will govern the proposed transaction does not include any provision that would limit the future interchange of traffic with any third-party connecting carrier, nor does the existing lease agreement between CCET I and NSR.”

According to the STB, “3i RR and Regional Rail represent that: (1) the rail lines of CCET II do not connect with the lines of the rail carriers currently controlled by 3i RR and Regional Rail; (2) this control transaction is not part of a series of anticipated transactions that would result in such a connection; and (3) the transaction does not involve a Class I rail carrier”; therefore, the Board reported, the proposed transaction is “exempt from the prior approval requirements of 49 U.S.C. 11323 pursuant to 49 CFR 1180.2(d)(2).” This transaction may be consummated on or after June 30, 2024, according to the STB.

“The Regional Rail team and I are delighted to partner with the team at the Cincinnati Eastern Railroad,” Regional Rail President and CEO Al Sauer said during the company’s July 2 announcement of the acquisition. “We look forward to building on the strong entrepreneurial culture at the railroad to further grow services with existing customers and support new opportunities.”

“The acquisition of the Cincinnati Eastern Railroad is an exciting addition for Regional Rail and fits perfectly with our strategy of supporting local management as they strive to grow with customers, our Class I partners, and local communities,” added Rob Collins, Managing Partner and Head of North American Infrastructure at 3i. “We look forward to providing continued support to Regional Rail for all future opportunities.” 

“We are proud of what we have accomplished at the Cincinnati Eastern Railroad since we commenced operations in 2014,” Paul Didelius said. “Having spent a lot of time with Al and the Regional Rail team, we believe they are the right partner for the railroad’s next phase of growth.” 

In a related development, Regional Rail last fall reported agreeing to acquire Indiana Eastern Railroad and Ohio South Central Railroad, Class III carriers operating a combined 107 miles of main line across Indiana and Ohio. It reported acquiring Clinton Terminal Railroad assets in August 2023; Effingham Railroad Company, South Point & Ohio Railroad, and Illinois Western Railroad Company in December 2022; and the Great Sandhills Railway and interests in three other freight rail assets located in western Canada in November 2022.