CSX sells ships for $300 million

By: Bubbajunk.com

CSX Corp. is abandoning the oceangoing shipping business to keep better track of its North American rail service.

The Richmond, Va.-based company announced Dec. 17 the sale of its subsidiary CSX Lines LLC for $300 million to The Carlyle Group, a private investment firm based in Washington, D.C.

CSX will still retain minority ownership in the company. "We will still have a 10 to 20 percent stake in the company," said Dan Murphy, CSX Corp. spokesman.

"It is still a benefit for us," he said of the small share of the shipping company. "It will allow us to participate in earnings in a company that has a history of solid performance."

The deal is expected to be finalized in early 2003 and is subject to regulatory approval. The company will be renamed Horizon Lines LLC.

Except for the new name, little will change at the shipping company, Murphy said. "It will be the same managers, the same employees and the same operation."

Charles Raymond, CSX Lines president, and top managers will be retained, Murphy said.

Raymond also will serve as chairman of the company's board of directors.

"There will be no change," said Eric Britten, planning and development manager in Alaska. "Our customers will see the same ships, service and schedules. All employees will be retained."

Britten said CSX employs 250 people in Alaska and about 1,600 nationwide.

CSX and Totem Ocean Trailer Express Inc. are the major shippers to Alaska. CSX Lines owns 17 vessels and 22,000 containers and provides freighter service throughout the Lower 48, Alaska, Hawaii, Guam and Puerto Rico.

CSX has two weekly sailings from Tacoma, Wash. to Anchorage and Kodiak, and one weekly sailing between Anchorage and Dutch Harbor.

Stuart Greydanus, Port of Anchorage director of operations, said he doesn't expect any glitches from the change of ownership.

"I think the status will remain the same," Greydanus said. "It should be a smooth transition."

CSX got into the ocean-shipping business in 1986 when it purchased Sea-Land Service Inc. In 1999, CSX sold its international shipping division to Maersk Line, a Danish container carrier.

The $800 million deal made Maersk Sealand the largest shipping carrier in the world.

CSX retained Sea-Land's domestic shipping services and some of its terminal operations.

CSX's Murphy said the sale of the ocean-shipping division is part of the company's strategy to return to its railroad roots.

"It's not so much that we are getting out of the boat business, but more to focus on our rail service, something we have been doing since 1827," Murphy said.

The Carlyle Group is a global private equity firm with about $14 billion under management. Former Defense Secretary Frank Carlucci heads the company.

The company is heavily involved in aerospace and defense. It also has provided investment capital to several other companies, including real estate, bottling, health care, media and telecommunications.