Officials of Consolidated Rail Corp. urged Congress yesterday to reject the sale of the Northeast freight system to any one company or group of individuals.
Instead, the Conrail officials, at a hearing conducted in Harrisburg, Pa., by Sen. Arlen Specter (R-Pa.), argued that stock in the company should be sold to the public. Under that plan, the current Conrail management would retain control of the railroad, which has slowly returned to financial health after it was created in 1976 from the bankruptcy of six Northeast railroads. This year, the railroad said it expects to earn $500 million, a $900 million turnaround from 1978, when the company reported a loss of more than $400 million.
"In our view, since $7 billion of taxpayer money was the basis for the resurrection of Conrail, it is appropriate to provide taxpayers an opportunity to invest in Conrail's future," Robert H. Platt, Conrail's executive vice president for finance and administration, testified.
"We think that after the government's huge investment in bringing Conrail to the healthy, robust state it is in today, that it is inappropriate for one large entity or a limited group of individuals to be the sole beneficiary," he added. "We do not understand why it is equitable to take what has been developed and allow it to be purchased by a narrowly focused ownership which did not contribute to this achievement."
Last month, Transportation Secretary Elizabeth Hanford Dole reduced a list of 15 bidders for Conrail to three: Alleghany Corp., the Norfolk Southern Corp., and a group investors headed by J. Willard (Bill) Marriott Jr.
She referred the Norfolk Southern offer to the Justice Department to review the competitive impact of selling Conrail to another railroad and submitted all three offers to the Treasury Department to review tax and financial questions raised by any of the three.
All three proposals submitted to DOT were offering about $1.2 billion in cash, and all had agreed to a number of five-year protection for Conrail users and employes. Railroad officials hope to have a DOT decision by the end of the year. Congress, which has to approve any sale, is expected to take a sharp look at DOT's recommendation. Considerable controversy -- no matter who wins -- is expected.
Until yesterday, Conrail had only spoken out against selling the company to another railroad, which Conrail Chairman L. Stanley Crane has argued would reduce competition and thus hurt shippers.
Platt reiterated that argument yesterday. At the same time, however, he spoke out against the Alleghany and Marriott bids. "We seriously question the benefits of that ownership and most particularly the benefits of their contribution to the future of Conrail because their purchase offers are heavily dependent on Conrail's assets and credit capacity."
Perhaps to gain more support for its bid, Alleghany yesterday publicly revealed the details of its proposals, which up to now have been kept confidential by the government. In addition to raising its $1 billion cash offer to the government to $1.2 billion, Alleghany said it promised to provide union members with 2.98 million Alleghany shares if the employes would continue wage concessions for three more years.
But, noted Platt, getting labor agreement may be the key stumbling block to any sale.