Oaktree’s Watco Buys Short Lines from Dow

Oaktree’s Watco Buys Short Lines from Dow

Watco Companies, a portfolio company of Oaktree Capital, has agreed to acquire the short line rail assets and related equipment of six North American manufacturing sites from Dow Chemical.

Watco is a provider of transportation services through a network of short line railroads, terminals, ports, and mechanical facilities in North America and Australia. Oaktree acquired a non-control position in Watco in December 2018.

Through this transaction with Dow, Watco will now provide rail services at Dow’s locations in Freeport and Seadrift, Texas; St. Charles and Plaquemine, Louisiana; and Fort Saskatchewan and Prentiss in Alberta, Canada.

According to Watco, it is the largest privately-owned short line operator in the United States and globally operates more than 43 short lines that cover more than 5,400 miles of track. Watco annually ships more than half a million carloads of commodities including food, lumber, paper, metals, minerals, chemicals, plastics, and energy products. The company was founded in 1983 by Charles “Dick” Webb and is headquartered in Pittsburg, Kansas.

“Watco is excited to serve Dow and honored to acquire these incredible assets,” said Dan Smith, the chief executive officer of Watco. “We are grateful for the confidence Dow has shown in Watco by trusting us with this critical role. This represents a revolutionary approach to industrial in-plant rail operations and we’re proud to help Dow create value for many years to come.”

“We appreciate Dow’s belief in Watco, and we look forward to this long-term partnership,” said Josh Connor, a managing director and co-portfolio manager of Oaktree’s infrastructure investing strategy. “Working alongside high-quality management teams, our infrastructure investing strategy is a constructive long-term investor with financial and operational expertise, facilitated by deep transportation industry experience.”

Oaktree makes investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate, and publicly-traded equities.  The Los Angeles-headquartered firm has over 950 employees and $113 billion in assets under management.

Private Equity Professional | July 7, 2020

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