PEORIA, Ill. -- Pioneer Railcorp announced on June 4 that the Company
has recently spun off the Elkhart Indiana division of its Michigan
Southern Operation, forming a separate railroad subsidiary, Elkhart &
Western Railroad Co. (EWR). The Company chose to create the EWR as a
separate entity in order to capitalize on its competitive access
strengths and to simplify interchange operations with the Norfolk
Southern.

The 9-mile line serves the northern Indiana counties of Elkhart and St.
Joseph, running from an interchange with the Norfolk Southern Railroad
in Elkhart (formerly Conrail) westward to Mishawaka, Indiana, just
northeast of South Bend. The line originally connected with the Grand
Trunk Western (GTW), but was disconnected under Conrail ownership. 

EWR's original line was completed in 1894 to provide rail users in the
area with an alternative to the Lakeshore Michigan Southern. Over the
years the line became one of the few great railroad promotions in the
1890's that was actually built and became an astonishing financial
success. By 1912 both Elkhart & Western and Lakeshore Michigan Southern
were purchased by the New York Central, a Conrail predecessor. 

As a result of Pioneer's negotiations with Norfolk Southern prior to
their acquisition of Conrail, the Company secured a second interchange
connection with CSX Transportation in Fort Wayne, Indiana through a
haulage agreement. Now the line has come full circle to its original
purpose, to provide rail users in Elkhart, Goshen, Mishawaka and South
Bend with competitive access. Nowhere in a significant radius to Elkhart
and Mishawaka, can a rail shipper receive the benefits of two Class 1
railroads, except for the Elkhart & Western Railroad. 

Company President & CEO Guy L. Brenkman remarked: ``Both the online and
transload prospects are significant, given the large industrial base in
Elkhart and St. Joseph counties. The EWR has begun the process of
establishing full time crews in the area and our Marketing Department is
working with several new business prospects. Pioneer feels that the EWR
will become an increasingly important shortline railroad service
provider to the area.'' 

Pioneer Railcorp is a shortline railroad holding company with 16 freight
railroads and one tourist railroad operating in ten states with over 465
miles of track.