Norfolk Southern Corp. said it drew $100 million on a credit line following a train derailment and fiery crash that spilled chemicals in East Palestine, Ohio, earlier this month.
(Bloomberg) — Norfolk Southern Corp. said it drew $100 million on a credit line following a train derailment and fiery crash that spilled chemicals in East Palestine, Ohio, earlier this month.
The company said in a regulatory filing Friday that it put in the borrowing request earlier this week to increase its cash position and “preserve financial flexibility.” Norfolk Southern has $200 million of borrowing capacity remaining on the $400 million credit line. The filing made no mention of the derailment.
The wreck on Feb. 3 — which was followed by another Norfolk Southern derailment near Detroit on Thursday — has sparked debate and anger over how the safety of the rails, environment and local residents interact with corporate profits. Meanwhile, Fox News’s Tucker Carlson and Sen. J.D. Vance have accused the federal government of ignoring the crash because of the town’s conservative politics. The company says its executives have been threatened with violence.
Read more: Ohio Train Crash Answers May Not Be Enough to Quell the Fury
A representative for Norfolk Southern declined to comment.
Stretched Thin
The derailment is likely to cost the company more than $100 million in remediation and other expenses, Bloomberg Intelligence analysts Holly Froum and Lee Klaskow wrote in a note Friday. With insurance, the company could pay more than $75 million out-of-pocket to address property damage and potential injury claims, the analysts wrote.
Large railroads have trimmed more than 40,000 workers since 2016, stretching remaining employees thin. Although the number of US train derailments annually has dropped, there were still 1,093 of them last year.
Railroads are a primary mode of transportation for hazardous materials, and the Norfolk Southern train had about 20 cars containing such substances, according to the US Environmental Protection Agency. One of the chemicals on the train, vinyl chloride, is considered a carcinogen.
The cost to protect Norfolk Southern’s debt for five years in the credit default swaps market spiked this week, reaching 50 basis points on Friday.
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