Earlier this month, American Commercial Lines announced plans to buy American Electric Power’s AEP River Operations for $550 million. AEP has a fleet of 58 towboats and 2,269 barges and 1,090 employees. Headquartered in Chesterfield, Mo., AEP River Operations earned $49 million in 2014 compared to $12 million in 2013.
Brent Dibner, president, Dibner Maritime Associates, a Chestnut Hill, Mass., industry management consulting firm, has worked with ACL on a number of projects over the years and knows the company well. He was out of the country at the time of the announcement and was late coming to the comment party.
“It’s a fundamentally bigger company with bigger market share and bigger value,” Dibner said in a phone interview from Spain. “We now see ACL once again being reborn. Ingram [Barge] and ACL effectively solidifying the dry cargo market. These are really well run companies.”
When the sale closes, sometime before the end of the year, ACL will acquire AEP River Operations by purchasing all of the stock of AEP Resources, the parent company of AEP River Operations. ACL will assume all assets and liabilities of AEP River Operations. “I suspect that AEP wanted to get out of the barge business and concentrate on its core utility business,” said Dibner. “Essentially, ACL has bought a company that was its rival. You’re seeing the consolidation of the dry [cargo] arena.”
For now, AEP will retain ownership of its captive barge fleet that delivers coal to the company’s regulated coal-fueled power plants owned by Appalachian Power, Kentucky Power and Indiana Michigan Power. AEP has signed a contract with ACL to dispatch and operate AEP’s captive barge fleet through the end of 2016. The captive barge fleet delivers about 19 million tons of coal annually to AEP’s regulated power plants. The fleet has 12 towboats, 498 barges and 229 employees.
New federal environmental regulations have affected utilities, especially coal-fired plants. “Does this change the course of coal in this country? No,” said Dibner.