The short-line holding company that the late Guy Brenkman built and nurtured his way has surpassed the three-decade mark. Pioneer Railcorp marked its 30th anniversary earlier this year.
Brenkman, who died in September 2013, founded the company in January 1986 as Pioneer Railroad Co. He later acquired its first property: an 18-mile leased line in Salem, N.J. The company renamed it the West Jersey Railroad and operated the short line until the mid-1990s.
Pioneer Railcorp — the name adopted in the early 1990s to reflect a bigger and more modern company — now owns 17 short lines and six other rail operations in 12 states that operate nearly 600 miles of track and serve more than 100 customers. Headquartered in Peoria, Ill., the firm manages the railroads through its Pioneer Lines subsidiary.
The company also owns a Pioneer Railroad Equipment Co. Ltd. subsidiary that buys and leases locomotives and rail cars, and offers car cleaning and light repair services, and a Pioneer Railroad Services Inc. subsidiary that provides car switching services.
A fourth-generation railroader from Peoria, Brenkman spent seven years switching cars for the Toledo, Peoria & Western Railway, and many more years acquiring and renting real estate properties before he founded Pioneer. He had railroading in his blood and had always dreamt of owning and managing his own railroad company, says Betty Brenkman, his widow.
Pioneer Railcorp currently is headquartered in Peoria, Ill., but the company previously was stationed in New Jersey and Arkansas. Photo: Jeff Stagl
In the mid-1980s, Guy Brenkman was acutely aware of the high number of unprofitable lines that were being spun off from Class Is because of the Staggers Act and rail industry deregulation.
“Guy saw what was happening in the short-line industry and embraced it,” says Betty Brenkman.
The question he sought to answer was: How do you raise the necessary capital to form a company and acquire a line? Brenkman’s first acquisition attempt, a deal to purchase a Burlington Northern Santa Fe line in western Illinois, fell through in part because of financing.
So, after attempts to convince bankers to underwrite the formation of his company — which ultimately were rebuffed because he owned no railroads, had no railroad management experience and declared bankruptcy during his real estate days — Brenkman organized his own private stock placement to raise money for an initial public offering (IPO). He sold $1 shares at county fairs, Peoria-area businesses and trade shows.
By October 1988, the IPO had generated $235,000, attracting 1,800 investors in 41 states. Some of the funds were used to swing the West Jersey Railroad deal. Pioneer’s stock later split.
In June 1993, Pioneer shares began trading on the Chicago Stock Exchange. Pioneer was the first short-line holding company to be traded on a stock exchange, says President and Chief Executive Officer J. Michael Carr, who joined the firm in March 1993 as controller. Brenkman rang the bell at the exchange to mark the event.
“Our stock later became part of the NASDAQ small-cap listings,” says Carr, who worked in public accounting and banking prior to joining Pioneer, where he eventually served as chief financial, treasurer and president under Brenkman.
Then, in 2005, the company went private. The timing was good because Pioneer would have had a hard time continuing to comply with public company accounting and reporting reforms mandated by the Sarbanes-Oxley Act of 2002, says Carr.
Before he retired in 2006 and handed the reins to Carr, Brenkman generated enough capital to acquire more than a dozen short lines. He targeted small railroads that were privately owned by individuals, or families who grew frustrated with generating enough business to survive or complying with ever-increasing federal safety regulations.
“He would call them up and ask, ‘Do you want to sell your railroad?’” says Pioneer General Counsel Dan LaKemper, who worked with Brenkman for many years and has served the company since its early days.
Brenkman would chat a long time with a short line’s owner about his or her business or meet for hours over cups of coffee. He sometimes would stay up all night figuring out a bid for a short line, says Orvel Cox, a current board member and former Pioneer manager who had worked with Brenkman from Day 1.