Broe’s OmniTrax to buy Colorado railroad out of bankruptcy

This article first appeared on BusinessDen.com, a BizWest news partner.

Pat Broe’s railroad company wants to add 150 miles to its footprint.

OmniTrax, which is part of the Denver-based The Broe Group — which Broe founded in 1972 — announced Wednesday that it has agreed to buy a railroad in south-central Colorado that was forced into bankruptcy three years ago.

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The short-line San Luis & Rio Grande Railroad runs across five counties. It sends cargo, and previously sent tourists, through Alamosa and over the Sangre de Cristo Mountains at La Veta Pass, 9,200 feet above sea level.

While it has been owned by Chicago-based Iowa Pacific Holdings, the railroad has amassed millions of dollars in debt. In 2019, several companies it owed money to convinced a federal judge to place it under bankruptcy protection and let a receiver operate it.

Bankruptcy documents show OmniTrax has agreed to pay $5.75 million for the railroad.

“As a Colorado company, we know how important the SLRG has been to the San Luis Valley and Colorado’s economy,” OmniTrax CEO Dean Piacente said in a statement Wednesday.

“The SLRG removes tens of thousands of trucks from Colorado’s highways and the Sangre de Cristo range’s scenic La Veta Pass,” he added. “Rail continues to be the most eco-friendly freight solution over land and that’s especially important to such a vibrant part of our state.”

A spokeswoman for OmniTrax declined to answer questions about the company’s plans for the railroad, including whether it will bring back scenic rail tours or make changes to cargo lines.

The sale to OmniTrax is not yet final. On Wednesday, a trustee for the railroad, William Brandt, asked a federal bankruptcy judge to sign off on the sale but said he is still open to competing offers for the railroad and will hold an auction if he receives any.

Since 2020, 65 companies have expressed interest in buying the railroad, according to Brandt. Six went so far as to visit its railyard and five filed letters of intent to buy but didn’t follow through. One company offered to pay $7 million but wouldn’t put a deposit down, so that was rejected, Brandt said. Finally, in September, OmniTrax offered $5.75 million.

The sale will allow Iowa Pacific Holdings to pay off some of the railroad’s considerable debt. It owes $5.6 million to a lender and a total of $3.8 million in unpaid property taxes to the five counties that the railroad passes through, according to Brandt.

The SLRG would be OmniTrax’s 26th railroad. It also owns the 80-mile-long Great Western Railway of Colorado, which runs through Fort Collins, Longmont, Loveland and Greeley.

Broe Real Estate Group, another division of The Broe Group, is currently building an eight-story office project in Cherry Creek, and plans to move OmniTrax’s headquarters into the structure. The firm previously developed Country Club Towers in the Wash Park neighborhood.