Friday, March 25, 2016

Who is the money man behind The Frank Patton Railroad (GBLRR)

So who is financing Frank Patton’s dream of the Great Plains Basin Railroad?  It’s an eight billion dollar project.  Patton is not known to be a billionaire and questions are arising who is financing this operation.  Frank, if you're smart you wil disclose these 14 financiers before this train of your runs off the end of the tracks.

 Regardless of who might be financing this ride, one thing is for certain.  Union Pacific isn’t funding this railroad dream.  If you haven’t read the Chicago Tribune article about the speculation capital shortline that desires eminent domain, the Union Pacific spokesman provided an interesting quote.

Chicago Tribune  March 21,2016

But Union Pacific said Monday that, "after carefully reviewing the proposal, Union Pacific determined in July 2014 that it was not interested in moving forward with a discussion on the Great Lakes Basin Railroad's bypass project."
"We have repeatedly communicated this position to Great Lakes Basin's leadership team," Union Pacific spokeswoman Calli Hite said. "Union Pacific is focused on several major public-private partnerships, including CREATE, which will benefit the region and enhance efficiency for Chicago-area and regional railroad operations."
CREATE, or the Chicago Region Environmental and Transportation Efficiency program, is a partnership between the U.S. Department of Transportation, the state of Illinois, the city of Chicago, Metra, Amtrak and the nation's freight railroads to improve rail line efficiency.

People like Patton pedaling snake oil, or a speculation capital project always makes it sound like their proposal is the only reasonable idea out there.  They sell politicians on the projects with their “entrepreneurial spirit” and their “vision”.  Entrepreneurial spirit like this starts with obtaining someone’s land through eminent domain, having a contiguous easement, then selling the “asset” to the highest bidder. 

Well, that was the Clean Line Energy Plan for a Merchant Transmission Line, similar to Pattons’ railroad model.  Have a nice song and dance about a dream, then flip the right of ways as soon as possible.  Here’s a tip Frank.  Do not have an option to sell the project before obtaining the easements.  At the very least, get the green light to file in the courts for eminent domain condemnations BEFORE you sign an option to sell the project. 

Frank, you’re probably going to want some operating cash and it will be tempting to sell an option to buy the Great Lakes Basin Railroad  for ….perhaps forty million dollars, but don’t do it.  Taking the money for an option to sell the easement is going to look bad and screw up your attempts to look like a legitimate shortline railroad.

One other thing, Frank.  Sooner or later you are going to have to disclose who your financial backers are.  Maybe it is best to call them your “partners”.  For the time being, this railroad with no tracks or loco in not much more than a three man operation so it’s probably best to refer to them as financial backer than partners.  Regardless, sooner or later they will have to come out of the shadows.  It’s probably best you bring them out of the closet sooner than later. 

Hiding the name of the money man only makes a speculation capital project look weak. 

The longer you keep them hidden, the more these angry farmers will drive the lack of transparency home.  You’re going to hear accusations that this rail-less railroad doesn’t have the financing to run a railroad and to be honest, it’s a legitimate accusation.  The best thing you can do as boss of this railroad is to tell the public who is supplying you with money.   Do it soon before this train loses traction.    As CEO of this proposed railroad, once it is perceived that your primary interest is obtaining the easement, it becomes an uphill battle to claim legitimacy.    Get in front of this issue Frank.  

Most every article read about this speculation project mentions the identities of the investors are not being disclosed.   Just today, The Times is Ottawa is doing an article and states;

Great Lakes founder and managing partner, Frank Patton, told the Chicago Tribune that 14 investors have committed to the project. The identity of those partners have not been released.

It is interesting the Chicago Business Journal has a vastly different report on this issue.  They make it sound the railroads are financing, cooperating , and perhaps supporting Frank Patton’s railroad. 

 Chicago Business Journal March 23, 2016              

Developer Great Lakes Basin Transportation has long touted its private financing and cooperation from Union Pacific (NYSE: UNP), BNSF Railway, Norfolk Southern (NYSE: NSC), and CSX (NASDAQ: CSX), the Chicago Tribune reported. Some estimates indicated a train could use the proposed bypass around Chicago to go from Indiana to Wisconsin in eight hours, instead of the 30 hours it sometimes currently takes, the report said.

But now, with Union Pacific choosing to back out, the funding for the $8 billion project may be in question, the report said, since Great Lakes hasn’t divulged the sources of its funding.

This article sounds as though Union Pacific is just now backing out from supporting the Great Lakes Basin Railroad.  Interesting, the Tribune specifically states UP has opposed this alternative since 2014.   Union Pacific has their own reasons for not supporting this proposed project, but it’s not surprising they want nothing to do with Great Lakes Basin Railroad.  Regardless, it’s not just a bunch of ticked off farmers who have concerns about the GLBRR mysterious financing.  It’s a legitimate concern.  

1 comment:

  1. It turns out that Patton owns 87% of the company & only two others own more than 1% & they are officers of the company.
    Snake oil salesman is the correct term for him.
    See Crain's for the details on ownership of Great Lakes Basin RR.