RailAmerica's Chilean Railroad Signs Historic Agreement With Railroad In Argentina

RailAmerica, Inc. (Nasdaq: RAIL), the world's largest short line and regional railroad operator, today announced that its majority-owned Chilean railroad, Empresa de Transporte Ferroviario S.A. ("Ferronor"), has executed an historical agreement with Belgrano Cargas, S.A., the operator of the General Belgrano railroad in Argentina. Under the new agreement, Ferronor will operate freight trains 618 kilometers (386 miles) from Chile's border city of Socompa to Guemes, Argentina -- marking the first time ever that Chilean trains will traverse Argentine soil on a regular basis.

Ferronor, under the agreement, will provide Argentinean and Chilean shippers with a single line train operation on the 900 kilometer (563 mile) international line between Salta, Argentina, and the Chilean Pacific port city of Antofagasta. Ferronor currently operates trains within Chile from Socompa to Antofagasta. In addition, Ferronor will, for the first time, be permitted to negotiate and sign transportation contracts with customers on this portion of track and develop the Chilean export market into Argentina and Bolivia. Ferronor, which moves approximately 50,000 tons of traffic on the international line annually, could potentially triple its international traffic under this agreement. In a separate pact, the two privately owned companies also signed an agreement that addresses general interchange of equipment and shipper billing.

Belgrano Cargas operates the 10,000 kilometer (6,250 mile) General Belgrano rail system in Argentina. Ferronor, a 2,240-kilometer (1,400 mile) railroad serving northern Chile, is majority-owned (55%) and operated by RailAmerica with minority Chilean partner Andres Pirazzoli y Cia., Ltda.

"This historical agreement now provides international shippers in South America with a more efficient mode of moving their goods across the continent from Atlantic ports to Pacific ports," said Gary O. Marino, Chairman, President and CEO of RailAmerica. "We believe that this agreement will make Chile and Argentina much more competitive in world markets. In addition, Ferronor has taken a giant leap in the race to become the leader in the international rail freight transportation market in South America. Since purchasing Ferronor in 1997, this railroad has substantially exceeded our expectations for growth and service, and this agreement will allow them to continue on that path for the foreseeable future."