Naming new officials, Railworks takes step in post-bankruptcy reorganization

July 24, 2002|By Paul Adams | Paul Adams,SUN STAFF

RailWorks Corp. named new leadership yesterday, marking another step in the Baltimore-based company's efforts to reorganize and emerge from bankruptcy in the midst of an industry slowdown.

The rail construction and services company named Ab Rees, a 38-year industry veteran and former vice president of operations for Kansas City Southern Railway, as its new chief executive officer and chairman.

He will replace Norman Carlson, a former Arthur Andersen executive who took over as chairman after the company's bankruptcy filing in September.

Jim Kimsey, who most recently was president of the Western Utilities Services division of Exelon Infrastructure Services Inc., was named president and chief operating officer. Exelon is a utility holding company that provides engineering, design and other services to deregulated utilities.

Both appointments are subject to approval by the U.S. Bankruptcy Court for the District of Maryland.

"With the appointment of the two new officers, I think we have a major indication that we are focused very seriously on emergence from bankruptcy," Carlson said.

RailWorks is a collection of companies that serve niches in the rail and mass transit industry. Member companies have about 3,500 employees nationwide in jobs including building municipal transit systems and maintaining tracks.

Fewer than two dozen administrative employees remain in Baltimore.

Battered by a slowdown in transit spending, RailWorks filed for bankruptcy protection last fall, reporting assets of $569.6 million and liabilities of $523.2 million. The company later received $165 million in financing to fund its reorganization.

The plan calls for Matlin Patterson Global Opportunities Partners, a private investment fund and the company's largest unsecured creditor, to take at least an 80 percent stake in the company.

RailWorks will receive financing of $250 million and $350 million of bonding capacity.

The next hearing on the company's reorganization is scheduled for Aug. 1. Carlson said the company's key lenders support the plan.

Industry analysts say the company faces a difficult business environment. Capital spending by Class I freight railroads remains sluggish, and municipal rail authorities have reduced spending as a result of falling tax revenues.

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