ROANOKE TIMES 
                      Copyright (c) 1997, Roanoke Times

DATE: Tuesday, April 8, 1997                 TAG: 9704080068
SECTION: BUSINESS                 PAGE: B-6  EDITION: METRO 
DATELINE: NASHVILLE
SOURCE: BLOOMBERG NEWS

CONRAIL DEAL `A MATTER OF DAYS' RIVALS NS, CSX NEAR ACCORD ON HOW TO SPLIT UP THE PIE

NS and CSX have been negotiating for several weeks to divide Conrail's rail system in the Northeast, a split that is expected to give Norfolk Southern as much as 60 percent of the Philadelphia railroad. Under an agreement reached between Conrail and CSX last month, CSX would buy Conrail for $10.5 billion and then sell part of the system to Norfolk Southern.

CSX Chief Executive John Snow and NS Chief Executive David Goode said Monday there are still decisions to make, such as how to divide certain facilities, which tracks should be shared and which ones should be owned solely by one railroad. An agreement between the two rival southern railroads was expected last week.

``Attempting to cooperate with an intense rival isn't always easy,'' Snow told the audience at Fieldston Co.'s Railroad Market Power conference in Nashville. ``It's been made a lot easier by a shared realization that a split is inevitable.''

Goode, speaking several hours after Snow, said the companies hope to reach a pact ``in a matter of days.'' Details such as revenue and savings projections will be made public at a meeting with Wall Street analysts in about two weeks, Goode said.

``There are a million details to be filled in, and that's what is taking us longer than I'm sure either of us wanted,'' Goode said.

Norfolk Southern and CSX plan to file a joint merger application in early June with the U.S. Surface Transportation Board, the federal agency that must approve all railroad mergers, Snow said.

The STB has said it will need about 300 days to review the Conrail acquisition. Snow said CSX and Norfolk Southern would press the agency to make its decision sometime in the first quarter of 1998.

Conrail will continue to exist as a corporate entity with three divisions, Snow said. The first will consist of all tracks and facilities bought by CSX; the second will include all assets acquired by Norfolk Southern. The third will consist of all tracks and facilities that will be shared and jointly managed by both railroads.

Norfolk Southern will likely take most of Conrail's assets in states where CSX already has a large presence, such as Maryland and Michigan, Snow said. CSX may take Norfolk Southern's line from Fort Wayne, Indiana, to Chicago, he said.

Both NS and CSX will gain access to Conrail's coveted tracks leading to shipping ports in New York and northern New Jersey, where billions of dollars of goods are imported and exported each year.

``We're going to go for business in the Northeast that Conrail never did,'' Goode said. The changes will improve economic development and job prospects in the region, he said.

Snow attempted to placate shippers in the audience who were concerned that the costs of acquiring Conrail would force Norfolk Southern and CSX to raise rates.

``Our hope is that we can make this without raising rates,'' he said. Rates could even fall because of savings from the merger, he said, adding that there could be no promises.

Shippers shouldn't expect a windfall, Goode said.

``I'm not going to say to anybody in this room that I'm going to reduce rates any more than I need to to get the business,'' Goode said.

LENGTH: Medium:   67 lines
ILLUSTRATION: PHOTO:  (headshots) Goode, Snow. color.