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U.S. Steel sells Transtar, LLC to Fortress Transportation and Infrastructure Investors for $640 million

Clients United States Steel Corporation

Jones Day represented United States Steel Corporation, an integrated steel producer with major production operations in the United States and Central Europe, in connection with the sale of its wholly owned short-line railroad subsidiary, Transtar, LLC, to a subsidiary of Fortress Transportation and Infrastructure Investors LLC for $640 million. FTAI is managed by an affiliate of Fortress Investment Group LLC, which has acquired over $17 billion in transportation-related assets since 2002. Transtar's operations include the Gary Railway Company in Indiana, the Lake Terminal Railroad Company and the Lorain Northern Company in Ohio, the Union Railroad Company, LLC in Pennsylvania, the Fairfield Southern Company, Inc. and the Birmingham Southern Railroad Company in Alabama, Delray Connecting Railroad Company in Michigan, and the Texas & Northern Railroad Company in Texas.

Simultaneously with the consummation of the transaction, U. S. Steel will enter into a Railway Services Agreement with the Transtar entities. Under the Railway Services Agreement, Transtar will continue to provide U. S. Steel with rail haulage, switching and transportation services at its facilities in and around Gary, Indiana, Pittsburgh, Pennsylvania, Fairfield, Alabama, Ecorse, Michigan, Lorain, Ohio and Lone Star, Texas.

The divestiture will generate immediate incremental value for U. S. Steel stockholders by monetizing a non-core asset, while better aligning U. S. Steel’s operating focus on its core business. U. S. Steel plans to use the net proceeds from the transaction for general corporate purposes and to strengthen its balance sheet.

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