Given Watco's presence elsewhere in the world (Watco is a short line operator, similar to G&W), Im thinking that they are possibly looking at growing into the Australian market. The CBH contract was a low risk way for them to do so. Now they're going to buy their own rolling stock in Qld, they've clearly changed their strategy. I also wonder if they might be looking at entry into the SG more strongly...
I wonder if, if time was rewound, Watco would have purchased the rollingstock in WA and run other services with it too?Watco won the tender to manage the CBH fleet, awarded in December 2010, for a period of 10 years. CBH's business plan is to own the above rail assets associated with the shipment of grain, and contract out day-to-day operations.
Once established in WA, Watco started looking for additional work to supplement it's CBH management fees.
In 2016 Watco Australia was awarded an infrastructure train contract by Brookfield Rail. This was the trigger for Watco obtaining its own locomotives
Watco purchased a controlling interest in Intermodal Group, July 2017, and commenced running the Forrestfield to Fremantle Harbour intermodal container service, previously operated by SCT Logistics.
I guess that Watco acquired the Qld contract as a hedge against loss of the CBH contract which will be due for renewal post 2020.
Agreed, however Watco's only operation outside of the USA is Australia
Watco Companies LLC is the group holding company
Wikipedia's explanation for LLCA limited liability company
. "A company—statutorily authorized in certain states—that is characterized by limited liability, management by members or managers, and limitations on ownership transfer", i.e., L.L.C.
LLC structure has been called "hybrid" in that it "combines the characteristics of a corporation and of a partnership or sole proprietorship". Like a corporation, it has limited liability for members of the company, and like a partnership it has "flow-through taxation to the members" and must be "dissolved upon the death or bankruptcy of a member"
You cannot compare Watco with Genesee & Wyoming Inc., its apples and oranges. Genesee & Wyoming is a public Company (NYSE GWR) and forms a component of the S&P 400. So MidCap with a market capitalisation of between $US1.4 and 5.9 billion.
G&W maintains or increases its working capital by calling on its shareholders, it is not solely reliant on borrowings. Watco has a glorified momma and poppa structure (not dissimilar to NRE), reliant on borrowing from banks and financiers for its operating capital.