National Railroad

GraduateSchool of Business Administration University of Virginia

UVA-F-1363
Version 1.5

National Railroad rider Corporation (AMTRAK): Acela Financing On April 30, 1999, Arlene Friner, CFO of Amtrak, instructed her Treasury supply to review a leveraged lease proposal from the BNY Capital keep LLC (BNYCF). Several weeks prior, Amtrak and its advisor, Babcock & Brown Financial Corporation, had invited financial institutions to submit lease-financing proposals for Amtraks planned purchase of locomotives and high-speed trainsets.1 The equipment would be utilized on the Acela line, Amtraks new brand that was designed to differentiate Amtrak rider trains and service in the Northeast corridor from the existing service.2 Acela, scheduled to scram service in late 1999, promised to offer faster berth times and premium service (see Exhibit 1). Arlene and her staff had bypast over the proposals and agreed that BNYCF was among those that offered the best terms. Now she had to decide whether Amtrak should finance the equipment purchases using BNYCFs leveraged lease proposal, or instead, borrow silver and purchase the equipment on its own.



Company Background In 1970 the join States Congress created The National Railroad Passenger Corporation (Amtrak) to checker that modern, efficient intercity passenger rail service would remain an built-in part of the national transportation system.3 The government mandated Amtrak to vex over the rail passenger operations of private railroads. Since then, Amtrak became the simple provider of passenger rail service in the linked States. Amtraks national network provided service to more than 20 million intercity passengers, and operated 516 stations in 44 states.

A trainset consisted of integrity first class pushchair car, one bistro car, three coach cars, one end coach car and two force play cars. 2 Babcock and Brown memorandum, p.1 3 Executive Summary: 1999 assessment of Amtraks Financial Needs Through 2002

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