The financial adviser for Conrail's employes said yesterday that they have reached essential labor-protection agreements with two of the three bidders seeking to purchase the freight railroad from the federal government.
Brian Freeman said in an interview that "we have deals" with Alleghany Corp. and a group of investors headed by J. W. (Bill) Marriott Jr., and that negotiations were continuing with Norfolk Southern Corp., the third finalist on the Transportation Department's list of approved bidders.
However, Fred Hardin, president of the Railway Labor Executives Association, which is handling the employes' efforts, said, "We are still talking" to all parties and that Freeman "may be a little optimistic." The unions that represent the railway workers in bargaining are not directly involved in the discussions with the potential buyers.
Freeman stressed that details remain unresolved with all bidders and that no contracts have been signed. The employes are also bidding to purchase the railroad, a fact that guarantees they will have a major say in any deal.
Transportation Secretary Elizabeth Hanford Dole wants to sell Conrail to one of those three because, among other reasons, they would be capable of weathering financial difficulties without government aid. Conrail's management is backing a public offering of Conrail stock as the preferred method of selling the railroad. Conrail Chairman L. Stanley Crane is now openly opposing the three bidders after months of behind-the-scenes opposition.
Spokesmen for both Marriott and Alleghany agreed yesterday with Freeman's characterization of the state of negotiations.
Freeman also was critical of efforts by Conrail's management to retain control of the Northeast-Midwest operation themselves through a public offering. "Conrail management's so-called public offering proposal is strange," Freeman said.
Crane has said in the past through spokesmen that restraints on labor are essential if Conrail is to continue to be a successful operation.
Nonetheless, Freeman said yesterday, "When he Crane was trying to stop the other bidders , he offered my clients more than any of the other proposals do . My clients didn't take it for two reasons. They felt Crane had no authority to make such offers without his board and that what he offered would have impaired the viability of Conrail."
Crane, with the assistance of railroad deregulation and special legislation, has performed an economic miracle at Conrail, turning it from a big loser that consumed more than $7 billion in federal subsidies into a big winner. The railroad is projecting a profit this year of more than $500 million, although it is is receiving tax breaks and wage concessions estimated to be worth about $150 million.
Crane has been characterized by federal officials as opposing all proposals other than a public offering because only with such an offering could he be guaranteed sole authority over the railroad. Freeman made the same charge, saying that "management's problem is that it wants sole control of the railroad. This isn't one person's or group's railroad."
"The issue is not Mr. Crane," Conrail spokesman Saul Resnick said yesterday. "The issue is the future structure of the company and it doesn't matter who leads it . . . The management believes that a public offering will serve the best long-term interests of the railroad shippers, employes, communities served and the nation's transportation infrastructure."
Resnick said that, since the Transportation Department has not disclosed the details of the labor protection agreements, it is impossible to compare them with what Crane offered. Any management offer would have "at its forefront" an agreement "that the company's future not be jeopardized," he said.