The representative sampling of projects below illustrates the experience of Harral Winner Thompson Sharp Klein principals in helping clients succeed. The projects are listed by functional area:
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ARMENIAN RAILWAY RESTRUCTURING
For the Government of Armenia and working with the World Bank, HWTSK developed a railway restructuring plan for Armenian Railway. The plan includes development of traffic forecasts for the transport sector and the railway, analysis of investment requirements, identification of opportunities for private sector participation in the sector, the development of profit center based business structure, and an analysis of the impact of restructuring on railway and rail sector employment in Armenia. A private vertically integrated concessioning structure was recommended and adopted by government. HWTSK provided continuing assistance to the Government in the development of the conditions for concessioning including advising on a new railway law, analysis of environmental and human resource issues, development of government policy on rail tariff and competition regulation, and other matters. HWTSK helped the government conduct a road show in London which attracted about 60 participants. The concession offer attracted 2 qualified bidders and in January 2008, the concession was awarded to Russia's RZD. Contract negotiations are underway with a final agreement expected in the first quarter of 2008.
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GEORGIA RAILWAY RESTRUCTURING
Working as subcontractors to Booz Allen Hamilton on this important USAID sponsored project in Georgia, HWTSK principals managed several consulting teams and provided on site management. The project assessed the current condition of rail sector assets, markets, and laws in Georgia; helped develop a dynamic strategy model of the Georgian Railway Sector; created forecasts for passenger and freight rail transport markets, supervised the development of financial models; and helped develop recommendations for restructuring the rail sector in Georgia to improve private sector participation and sector efficiency.
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TURKEY RAILWAY (TCDD)
Working with TDCC and the World Bank, Mr Winner reviewed railway reform plans and current railway performance. Based on a financial analysis of alternatives railway structures and networks. The analysis was used to develop refinements to Turkey’s rail sector restructuring program to encourage private sector participation in the sector.
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FURTHERING RAILWAY REFORM IN UZBEKISTAN
Working with the railway of Uzbekistan (UTY) and various government departments, HWTSK developed a master plan for the development of UTY’s railway infrastructure and operations on a commercial basis. The project involved the development of a financial model for the railway and for its many subsidiaries including engineering, workshops, passenger services, container operations, and refrigerated freight services companies. The project had Asian Development Bank financing.
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UZBEKISTAN RAILWAYS FREIGHT TRACTION RENEWAL PROJECT
As senior consultant to EBRD, Mr Harral evaluated Uzbek master plan for enterprise restructuring and associated capital investment program, assessed financing capacity, identified components to be financed by EBRD, defined loan conditionalities, and led EBRD team in early loan negotiations, including co-financing discussions with Asian Development Bank.
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RESTRUCTURING SOUTH AFRICAN RAILWAYS
Working with Mercer Management Consulting, Messer’s Winner and Klein assisted in the evaluation of rail freight operations and equipment in any potential restructuring of the freight operations of the South African Railway.
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RESTRUCTURING OF FERROCARRIL NACIONAL DE HONDURAS
Mr Sharp helped develop a strategy for concessioning Ferrocarril Nacional de Honduras, the national railway of Honduras. Issues assessed included the geographic scope of the prospective concession, whether the concession should include both passenger and freight services, how non-rail assets should be addressed, the desirability of any pre-concession public investment in the rail service, social desirability of subsidized rail passenger services, the need for a PSO agreement, and labor transition matters.
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KAZAKHSTAN RAIL SECTOR RESTRUCTURING DEVELOPMENT PROGRAM
For the Asian Development Bank, HWTSK developed a rail sector restructuring program for Kazakhstan. The proposed program introduces rail services competition throughout the Kazakh rail network, separates passenger services into a new state enterprises, establishes the fundamental principals of access pricing and a transparent access-fee based charge for passenger cross subsidy arrangements. The program also recommended $85 million in railway investments plus a $50 million sector development loan for the government, to be financed by ADB.
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WESTRAIL PRIVATIZATION STRATEGY AND METHOD
Mr Winner assisted the Government of Western Australia in a review of commercialization and privatization strategies for Westrail. This analysis considered various forms of concessioning, privatization, continued government ownership, separation of infrastructure from above rail operations and other structural reforms.
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UKRAINE RAILWAY BUSINESS PLAN
HWTSK Assisted Ukrzaliznytsia, the national railway of Ukraine, develop a commercialization and restructuring plan. This effort involved defining the role of UZ and the Government of Ukraine in the provision of passenger services, developing a traffic and revenue forecast, setting out cost reduction measures, prioritizing investments to support cost reduction and developing a financial forecast of railway operations to support financing for the restructuring effort.
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UGANDAN RAIL REFORM, PRIVATIZATION IMPLEMENTATION STRATEGY
Mr Sharp advised the government of Uganda on steps necessary to prepare for concessioning of Uganda Railways Corporation and the appointment of a Transactions Advisory Consultancy. Our work included developing recommendations regarding legal changes required pre-concessioning, organizational placement of regulatory responsibilities, advising on how to handle the railways extensive marine services, as well as form of restructuring (e.g., vertical separation) disposition of closed lines, functions of the State railway organization after concessioning and procedures for labor transition.
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COSTA RICA AND EL SALVADOR PRIVATIZATIONS
Mr Sharp helped review feasibility of rail privatization projects in Costa Rica and El Salvador, including evaluating traffic prospects, investment requirements and overall financial feasibility. Developed terms of reference for a transaction advisor to the Instituto Costarricense de Ferrocarriles (INCOFER).
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RESTRUCTURING OF RAILWAYS OF ESTONIA, LATVIA, AND LITHUANIA
For EBRD, Mr. Thompson reviewed operations and practices of the Baltic railways and recommended restructuring and investment plans. The work included a review of government regulation and recommendations on changes in transport regulatory environment. It led to a series of projects financed by EBRD for Estonian freight operations and the first privatization of a CIS railway.
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RAIL SECTOR SURVEY: RUSSIA, KAZAKHSTAN, BELARUS AND UKRAINE
Mr. Winner, Thompson, and Harral conducted this landmark study for the European Bank for Reconstruction and Development. It reported on the first hard study of the rail system of the former Soviet Union just as it was breaking up. The objectives were to identify investment candidates for EBRD and other western lenders and to develop a path for railway reform that would introduce market economics and private capital to these rail systems, the largest in the world.
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RESTRUCTURING ARGENTINA RAILWAYS
Mr. Winner assisted the Government of Argentina to restructure and privatize the national rail system with company-wide reorganization, analysis of alternative privatization methods, formation of a national-level transportation oversight office, development of regulatory reform mechanisms, and evaluation of the likely success of various restructuring alternatives. After successful concessioning, Government support of railway operations in Argentina declined from about US$1 billion in 1990 to less than US$50 million currently.
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FORMATION OF NATIONAL RAIL CORPORATION
Mr Winner worked with a taskforce composed of representatives of Australia’s railways and government and union officials to develop the basis for formation of National Rail Corporation, a nationwide intermodal and interstate freight operator in Australia. NRC was formed to reduce state railway operating losses from interstate traffic, introduce new, lower cost rail operating methods to Australia’s railroads, and attract new freight traffic to rail throughout Australia. NRC was formed and has been successful in introducing new working methods, lowering operating costs and eliminating interstate freight losses for state railroads. It is to be privatized in 1999 or 2000.
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RESTRUCTURING STATE RAILWAY AUTHORITY OF NEW SOUTH WALES
Working with the Managing Director of SRA and the government of the State of New South Wales, Mr Winner helped develop a new business strategy and plan introducing separation of freight and passenger services from investment and maintenance of the infrastructure. Implementation saw formation of several different business units. One of those, FreightCorp, the freight operating system, is likely to be privatized in the next few years.
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NEW ZEALAND RAILWAY REFORM AND RESTRUCTURING
Mr. Winner assisted the board of directors of New Zealand Railway, a state owned enterprise at the time, in the development and implementation of a railway reorganization and restructuring strategy. The railway was ultimately sold to private investors.
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PORT OF SANTA MARTA
HWTSK worked with the Port of Santa Marta and Global Insight, an econometric forecasting company, to develop a strategy for the port to participate in revised rail concessions in Colombia. The endeavor will be a public-private partnership in the form of a concession for state owned infrastructure.
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PRIVATE CLIENT
HWTSK conducted several studies for a private client interested in the evolving rail Russian rail market and in understanding how shippers might be treated as reforms in the sector evolve. The private client was considering several significant investments in Russia. Our work included an analysis of the evolving Russian railway sector, the prospects for private investments in the rail sector and the market prospects for a number of sectors of the Russian economy (including oil & gas, timber and lumber, minerals and ores, and fertilizers) HWTSK considered the evolving regulatory structure and developed an analysis of the risks associated with different regulatory developments, of the sectoral development of the Russian economy, and world-wide market prospects for several rail hauled commodities.
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KAZAKHSTAN RAILWAYS BUSINESS PLAN
For Kazakhstan railways, HWTSK prepared a comprehensive business plan including a market forecast, operations plan, investment plan and financial forecasting model. The plan was used to support a loan from the EBRD.
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ARMENIAN RAILWAY BUSINESS PLAN
For the Government of Armenia and working with the World Bank, HWTSK developed a commercially based business plan reflecting the business-unit structure of the Armenian Railway to support an investment program. The project considered the restructuring strategy currently in place and made recommendations relative to private participation in equipment and workshop markets, and accounting systems to support the new structure.
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UKRAINE RAILTEL COMMUNICATIONS
Mr Harral evaluated Ukrainian proposal for development and commercial exploitation of nationwide optical fiber backbone network along rail right of way, prepared summary Information Memorandum, and solicited international strategic investors.
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AUSTRALIAN NATIONAL BUSINESS PLAN AND BID
Working first with RailAmerica, Mr. Winner helped identify the business opportunity available in the AN privatization; developed an assessment of potential partnership arrangements for a successful bid and helped RailAmerica join the Great Southern Railway consortium. Worked with Macquarie Bank, the consortium leader, in developing additional partnerships, including Goninans and Fluor -Daniel. Prepared a complex consortium bid for all rail properties of Australian National Railways separately and in combination. Our work included due diligence review, development of traffic forecasts, operations and investment plans and financial forecast. Presented plan to financing institutions and prepared bid documents.
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RUSSIAN INTERMODAL NETWORK
For the EBRD and potential investors, Mr. Winner identified an intermodal strategy for the Russian railways and private sector partners and developed plans for investment in several new intermodal terminals (St Petersburg and northeast of Moscow), routing improvements and organization structures for a proposed intermodal enterprise.
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RAIL STRATEGY FOR QUEENSLAND RAILWAYS
Working with the board of directors of Queensland Railways, government officials, and major shipper groups, Mr. Winner helped develop railway reform strategies that allowed QR to remain an integrated railway while meeting the requirements of the National Competition Act which requires access to strategic assets.
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UNION PACIFIC RAILROAD OPERATING PLAN
Mr Winner worked with MultiModal Applied Systems and the Union Pacific Railroad to develop a new operating plan to improve traffic flows and reduce congestion across this major US railroad. The plan, called the Union Pacific Unified Plan (UP2), has resulted in improved velocity across the UP network and is substantially reducing UP operating costs.
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CSX TRANSPORTATION OPERATING PLAN
Mr Winner worked with MultiModal Applied Systems and CSX Railroad to develop a new CSX operating plan to improve traffic flows, reduce car-handlings and other operating costs. This plan, the CSX One Plan, has resulted in improved velocity across the CSX network and has substantially reduced CSX operating costs.
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FERROVIA SUL ATLANTICO PROFIT MEASUREMENT SYSTEM
Mr Sharp helped railway identify ways to enhance equipment utilization, improve service times, and decrease capital investment requirements, so that the railway could handle more business, using existing track and rolling stock. Study focused on capacity and investment in FSA’s key soybean business.
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MRS LOGISTICA
For MRS Logística, Mr Winner analyzed costs and operations of heavy haul and merchandise services, comparing them to benchmark railway services. The project identified opportunities for MRS to reduce its costs, particularly in maintenance of track, maintenance of locomotives and fuel consumption. The project developed investment strategies to transform the company’s iron ore operations into high-quality, low-cost unit-train based services.
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CSX TRANSPORTATION
Working with Mercer Management Consulting, Mr Winner directed a long run program to improve CSX Transportation service reliability and reduce costs. The work included process reengineering in operations management, service design, equipment management functions, as well as the development of new organization structures and strategies. The program established that service reliability was associated with low operating costs and improved equipment utilization. The Service Reliability Project developed and implemented improved practices in crew and locomotive management and established the service lane concept of operations management at CSX. CSX experienced reduced costs, improved service reliability, and improved equipment utilization.
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CHINESE INTERMODAL OPPORTUNITY
Over a period of several years, Mr Thompson worked with the Chinese Railways to develop procedures and schedules for intermodal train operations. The work included the potential for formation of a new equipment leasing company (containers, freight cars and locomotives) and intermodal operating companies managing terminals and providing intermodal delivery services.
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ASIAN DEVELOPMENT BANK TRANSPORT SECTOR STRATEGY
In 2001, Mr Harral conducted comprehensive surveys of the current status and likely future of the highway and railway sectors in all Developing Member Countries of ADB to identify key issues and best practices and to counsel ADB on its future role in the transport sector. The HWTSK reports and recommended ADB transport sector strategy were updated in 2007.
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UKRAINE RAILTEL COMMUNICATIONS
Mr Harral evaluated Ukrainian proposal for development and commercial exploitation of nationwide optical fiber backbone network along rail right of way, prepared summary Information Memorandum, and solicited international strategic investors.
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INTERNATIONAL FINANCE CORPORATION – CHINA RAIL SECTOR
HWTSK provided due diligence support to the IFC for a project in China. IFC was considering financing a major expansion of a railway castings manufacture in China and sought HWTSK assistance in market analysis, review of foundry operations and quality control practices, and an evaluation of the feasibility of the proposed project. Our work included an assessment of the market for railway casting products in China and worldwide, contact with North American customers of the foundry and an on-site inspection and review of the proposed facility.
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FERROVIA SUL ATLANTICO PROFIT MEASUREMENT SYSTEM
Mr. Sharp helped develop a system for calculating service costs and profitability for the railway’s Brazilian freight business. The system provides costs and revenues by customer, commodity, equipment type and route, and is designed for use by marketing, strategic planning and operations planning professionals.
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INFRASTRUCTURE COST MODEL FOR PAKISTAN RAILWAYS
Mr. Sharp helped develop a financial model for Pakistan Railways that allows it to understand its costs of providing infrastructure access, to differentially price access based on the rates charged by truck competitors and the services negotiated, and to examine the impact of the access charges on the financial situation of the railway.
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UKRAINE FREIGHT WAGON REQUIREMENTS ANALYSIS FOR EBRD
In late 2007, HWTSK conducted a review of long term freight wagon requirements in Ukraine. The HWTSK analysis included a review of historical performance, development of both a macro and micro economic forecast for rail traffic in Ukaine, a segment based analysis of future rail traffic, shipper interviews, inspection of both wagon building companies and facilities and wagon maintenance facilities and practices. HWTSK developed forecasts for wagon requirements by type of wagon for the period 2008 to 2022. In addition, the report contained recommendations relative to new wagon designs for viable private sector financing in the long term.
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MOATIZE COAL TRANSPORT STUDY
For the Government of Mozambique, HWTSK analyzed alternative routes for the transport of coal from the Moatize coal fields. The analysis included a review of rail and port infrastructure requirements as well as transport costs from source to ultimate destination of mine products. The analysis considered capital and operating costs for transport and a variety of ship sizes. Both rail and port operations were public-private partnerships in the form of privately operated concessions for public infrastructure. Private investment, subsidized by government guarantees of Development bank loans, also play a role in the project.
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INTERNATIONAL FINANCE CORPORATION - RUSSIA
HWTSK provided due diligence support to the IFC in a series of private sector investments in the rail sector. Our work included an analysis of the evolving Russian railway sector, and the prospects for privately financed railway rolling stock in a number of different sectors of the economy (including oil & gas, timber and lumber, minerals and ores, fertilizers) for this international lender. As a part of this work, HWTSK considered the evolving regulatory structure and developed an analysis of the risks associated with different regulatory developments, of the sectoral development of the Russian economy, and market prospects for several rail hauled commodities.
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WORLD BANK: COMPARATIVE STUDY OF ROAD & RAIL DEVELOPMENTS IN INDIA AND CHINA
This study contrasted the development paths for road and rail transport over the decade 1992-2005 in China as well as India, to identify successful models that are potentially transferable. The study stimulated interest in the Government of India, & subsequently Mr Harral led visits of top Indian railways & highways officials, including the infrastructure adviser to the Prime Minister of India, in study tours of Chinese railways & highways in September-October 2005 to further consider infrastructure development options.
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LATIN AMERICA CONCESSIONING RETROSPECTIVE
For the Railways Adviser, World Bank, Mr Sharp prepared a review of the results of some four dozen railway restructurings in Latin America based on the concessioning strategy. The study encompassed freight and passenger concessions in Argentina, Bolivia, Brazil. Chile, Colombia, Mexico and Peru. Results were assessed in terms of impact on productive and allocative efficiencies, investment levels, adequacy of concession procedures, regulatory oversight, market shares, network inspection and public sector-private sector responsibilities, culminating in a World Bank transport policy paper and contributions to the World Bank railways database.
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PRIVATE SECTOR INVESTORS IN RUSSIAN RAIL SECTOR FOR EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT
EBRD requested HWTSK assistance in conducting due-diligence for a loan to a private sector entity in Russia for railway equipment. HWTSK investigated the ownership structure and financial strength of the borrower, interviewed management, developed a financial model of the company, prepared traffic forecasts for the commodities moving in the target railway equipment, analyzed the evolving market for private locomotive ownership and evaluated the financial returns and risks associated with the borrower, the economic environment, and the evolving regulatory environment for railway operators and carriers in Russia.
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US TDA AND CENTRAL EAST AFRICAN RAILWAY
HWTSK evaluated the feasibility of extending CEAR railway lines from Malawi into Zambia, providing a three country rail corridor stretching from eastern Zambia through Malawi and Mozambique to the port of Nacala. The project also included construction of an intermodal transfer terminal located in Zambia an estimation of construction and operating costs, prospective markets and revenues, evaluation of financial feasibility and identification of financing prospects.
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REGIME AUTONOME TRANSPORTS DE PARISIENS
HWTSK served as rail industry expert advising three different private equity investors in a service-lease equipment financing arrangement for RATP, the metro operator in Paris, France. About 1,000 pieces of equipment were included in all three transactions, including rubber-tired and steel wheeled subway equipment and LRVs.
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STORSTOCKHOLMS LOKALTRAFIK
HWTSK was rail industry advisor to several private equity investors in a series of transaction for the Stockholm transit system. The transaction included both light rail vehicles and metrocars.
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OSTERREICHISCHE BUNDESBAHNEN
For three different equity investors, HWTSK served as rail industry expert in a series of private sector service-lease equipment financing transactions involving EMUs, single and double-deck push-pull commuter equipment, and high-speed international passenger coaches, and track maintenance equipment owned and operated by Osterreichische BundesBahnen (OeBB), the national railway of Austria.
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WIENER LINIEN SERVICE LEASE FINANCING
Rail industry expert advising two different private equity investors in a series of service-lease equipment financing transactions involving more than 850 pieces of tram, trolley and subway cars owned and operated by Wiener Linien, the transit service authority in Vienna. Austria
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BI-STATE DEVELOPMENT CORPORATION
HWTSK was rail industry advisor to private equity investors in a series of transaction for Bi-State Development’s Light Rail Vehicles. The transactions included 50 light rail vehicles.
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HAMBURGER HOCHBAN & ALTONA-KALTENKICHEN-NEUMUNSTER
HWTSK was rail industry expert advising private equity investors in a series of service-lease equipment financing transactions involving 70 EMU train sets (245 cars) of metro railway cars operated by HHA and AKN in Hamburg, Germany.
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SOCIETE NATIONALE CHEMIN DE FER
HWTSK acted as rail industry adviser to two different private equity investors in very high-speed intercity passenger equipment. The transactions involved EuroStar and TGV-Duplex train sets for use between the United Kingdom and France and on the dense Paris-Lyon TGV line of the SNCF.
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TRANSITIO (SWEDEN)
HWTSK served as rail industry experts advising private equity investors in service-lease financing transactions involving 37 EMU trainsets of high-speed intercity and extended commuter services operated by a number of agencies within Sweden.
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ANALYSIS OF PRIVATE SECTOR RISK FOR SWISS FEDERAL RAILWAY AND UBS
For the Swiss Federal Railways and UBS, Mr Klein performed technical due-diligence on a fleet of over 27,000 leased tank wagons. Provided estimates of financial risk and costs to remediate conditions.
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BERLIN VERKEHRSBETRIEBE
HWTSK served as rail industry experts advising several private equity investors in a service-lease equipment financing arrangement involving 140 EMU subway cars and 60 LRVs and metro cars owned and operated by Berlin Verkehrsbetriebe (BVG), the transit authority in Berlin, Germany.
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PRIVATE CLIENT
HWTSK completed a due diligence project for an investment bank lending for an acquisition of a Russian tank wagon operating company. We advised the bank on the risks and potential returns that might be expected in this rapidly evolving market.
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CENTRAL PUGET SOUND REGIONAL TRANSIT AUTHORITY
HWTSK acted as rail adviser to private equity investors in Sound Transit locomotive hauled commuter cars and high-speed passenger rail locomotives used to provide commuter services in Seattle, Oregon.
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KINGDOM OF SAUDI ARABIA BOT
Mr Sharp assisted the Ministry of Petroleum and Minerals to develop negotiating positions in discussions with investors relating to the development of a new railroad linking ports to minerals production areas on a Build-Operate-Transfer basis.
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NEW JERSEY TRANSIT
HWTSK worked with NJT, Fleet Capital Leasing, and Macquarie Corporate Finance to develop a methodology for private sector financing the infrastructure of the Hudson Bergan Light Rail line. A paper has been published in Transport Law Review about this financing mechanism.
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FINANCIAL ADVISORS TO SOUTH BALKANS DEVELOPMENT INITIATIVE
HWTSK served as financial advisors to the Finance and Transport Ministries of Albania, Bulgaria and Macedonia for the development of the South Balkans transport corridor and other transport infrastructure between the countries.
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NORTHEAST MAINTENANCE SERVICE CORPORATION
For the Alstom-Bombardier Consortium that supplied Amtrak with the Acela maintenance, Mr Klein created the complete General Ledger and Cost Center codes for the enterprise’s chart of accounts and new software. The chart of accounts had to model the complex contractual arrangements between Amtrak, the Consortium, the Consortium’s own sub-contractors, and tax authorities, as well as the routine payroll, fixed asset, depreciation, A/R, and A/P modules.
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FINANCIAL OVERSIGHT FOR METRA, THE CHICAGO COMMUTER RAILRWAY
Mr Klein provided financial oversight of a contractor's new railroad car factory as a contractor to Ernst & Young for four years. Created accounting and audit procedures. Disqualified approximately $30 million in M-K claims to-date performing audits of accounting systems and manufacturing processes. Identified M-K weaknesses almost immediately, refused to approve milestones, and correctly predicted production and other difficulties very early on.
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CONCESSION TRANSITION ASSISTANCE
Working with the Ministry of Transport and Communication, a high-level Ministerial Committee, and a Concession Transition Group, and the World Bank, HWTSK has provided transition assistance in the preparation of a new Railway Law allowing for private sector operation of rail services, development of pricing and access regulations, preparation of terms and conditions for the concession and the development of a draft concession agreement for planned concessioning of the Armenian Railway in late 2007.
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TRANSPORT STRATEGY DEVELOPMENT FOR THE ASIAN DEVELOPMENT BANK
HWTSK worked with experts from the Asian Development bank to evaluate past lending practices in transport and develop a new strategy to direct ADB transport lending.
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MALAWI RAILWAY CONCESSIONING
Mr Sharp advised the Malawi Privatization Commission on concessioning the Malawi Railways. He reviewed market and financial forecasts for the railway. We advised about the level of fees that should be expected from a concessionaire, within the framework of the draft concession agreement provided to bidders. Advised on amendments and improvements to the draft concessioning agreement and assisted the Commission in negotiations with the preferred bidder.
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ZIMBABWE RAILWAY RESTRUCTURING
Mr Sharp advised the National Railways of Zimbabwe regarding the type of regulatory oversight needed over the restructured railway industry, given the post-reform structure of the industry and the necessary separation of monopoly and competitive activities, in local and regional transport markets. Also advised on the scope of prospective separation of freight and passenger railway operations and equipment ownership, maintenance in a restructured rail industry.
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