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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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SCHEDULE 13E-3

RULE 13E-3 TRANSACTION STATEMENT
(PURSUANT TO SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934)

NORTH CAROLINA RAILROAD COMPANY
(Name of the Issuer)

NORTH CAROLINA RAILROAD COMPANY
THE NORTH CAROLINA DEPARTMENT OF TRANSPORTATION
BEAUFORT AND MOREHEAD RAILROAD COMPANY
(Name of Persons Filing Statement)

North Carolina Railroad Company 658238100
Common Stock, $.50 par value per share CUSIP Number of Class of
(Title of Class of Securities) Securities)

Scott M. Saylor David D. King Garland B. Garrett, Jr.
Executive Vice President Deputy Secretary, Transit, Rail and Aviation President
and General Counsel North Carolina Department of Transportation Beaufort and Morehead
North Carolina Railroad Company One South Wilmington Street Railroad Company
3200 Atlantic Avenue, Suite 110 Raleigh, North Carolina 27611 One South Wilmington Street
Raleigh, North Carolina 27604 (T) (919) 733-2520 Raleigh, North Carolina 27611
(T) (919) 954-7601 (F) (919) 733-9150 (T) (919) 733-2520
(F) (919) 954-7099 (F) (919) 733-9150

(Name, Address, Telephone Number and Facsimile Number of Person Authorized to
Receive Notices and Communications on Behalf of Persons Filing Statement)

With a copy to:

James F. Verdonik Larry J. Dagenhart, Esq. Grayson G. Kelley, Esq.
Kilpatrick Stockton LLP Smith Helms Mulliss & Moore, L.L.P. Special Deputy Attorney General
Suite 400, 4101 Lake Boone Trail 214 N. Church Street North Carolina Department of Justice
Raleigh, North Carolina 27607 Charlotte, North Carolina 28202 One South Wilmington Street
(T) (919) 420-1700 (T) (704) 343-2000 Raleigh, North Carolina 27611
(F) (919) 420-1800 (F) (704) 334-8467 (T) (919) 733-3316
(F) (919) 733-9329

(CONTINUATION OF COVER PAGE OF SCHEDULE 13E-3)

This statement is filed in connection with (check the appropriate box):

a. /X/ The filing of solicitation materials or an
information statement subject to Regulation 14A,
Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange of 1934.

b. / / The filing of a registration statement under the
Securities Act of 1933.

c. / / A tender offer.

d. / / None of the above

Check the following box if the solicitation materials or information
statement referred to in checking box (a) are preliminary copies: /X/

Calculation of Filing Fee
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Transaction Valuation (1) Amount of Filing Fee (2)
70,769,262 $14,154
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(1) Estimated solely for purposes of calculating the filing fee
and pursuant to Rule 0-11 under the Securities Exchange Act of
1934 (the "Act"), based upon an estimate of the proposed
maximum amount of merger consideration that could be paid in
the Merger ($66.00 per share in cash with respect to 1,072,262
shares).

(2) The amount of the filing fee, calculated in accordance with
Rule 0-11 of the Act, equals 1/50th of one percent of the
Transaction Value.

/X/ Check if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which
the offsetting fee was previously paid. Identify the
previous filing by registration statement number, or
the form or schedule and date of its filing.

Amount Previously Paid: $14,154 Filing Party: North Carolina Railroad Company

Form of Registration No.: SCHEDULE 14A Date Filed: November 25, 1997

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Exhibit Index appears on page 10

(ii)

SCHEDULE 13E-3

INTRODUCTION

This Rule 13e-3 Transaction Statement (the "Statement") is being filed
in connection with the proposed merger (the "Merger") of Beaufort and Morehead
Railroad Company, a North Carolina corporation ("B&M") which is wholly owned by
the State of North Carolina (the "State") through the North Carolina Department
of Transportation ("DOT"), with and into North Carolina Railroad Company, a
North Carolina corporation (the "Company"), pursuant to the terms and conditions
of the Agreement and Plan of Merger dated as of October 3, 1997, among B&M, DOT
and the Company (the "Merger Agreement"), a copy of which is attached hereto as
Exhibit (c)(1). Upon consummation of the Merger, the separate corporate
existence of B&M will cease, and the Company will continue as the surviving
corporation, wholly owned by the State through the DOT. Upon completion of the
Merger, each share of Common Stock, par value $.50 per share (the "Shares"), of
the Company (other than Shares held by the State or its affiliates, and Shares
held by shareholders exercising appraisal rights pursuant to Section 55-13-01,
et seq. of the North Carolina Business Corporation Act) will be converted into
the right to receive in cash $66.00 per Share, without interest, upon the terms
and conditions set forth in the Merger Agreement.

The Cross Reference Sheet is being supplied pursuant to General
Instruction F to Schedule 13E-3 and shows the location in the Company's
preliminary proxy statement (the "Proxy Statement") concurrently being filed
with the Securities and Exchange Commission (the "SEC") in connection with the
proposed Merger, which contains information required to be included in response
to items of this Statement. A copy of the Proxy Statement is attached hereto as
Exhibit (d)(1). The information in the Proxy Statement, including all exhibits
thereto, is hereby expressly incorporated herein by reference and the responses
to each item are qualified in their entirety by the provisions of the Proxy
Statement. All information in, or incorporated by reference in, the Proxy
Statement or this Statement concerning the Company or its advisors, or actions
or events with respect to any of them, was provided by the Company, and all
information in, or incorporated by reference in, the Proxy Statement or this
Statement concerning the DOT or B&M or their affiliates, or actions or events
with respect to them, was provided by the DOT. The Proxy Statement incorporated
by reference in this filing is in preliminary form and is subject to completion
or amendment. In addition, the information in the Proxy Statement is intended to
be solely for the information and use of the SEC, and should not be relied upon
by any other person for any purpose. Capitalized terms used but not defined in
this Statement shall have the respective meanings given them in the Proxy
Statement.

As of October 31, 1997, the State owned 3,211,208 shares of Common
Stock of the Company, representing approximately 74.97% of the total outstanding
Common Stock of the Company. This Statement is being filed jointly by the
Company, the DOT and B&M. By filing this Schedule 13E-3, none of the joint
signatories concedes that Rule 13e-3 under the

Securities Exchange Act of 1934, as amended, is applicable to the Merger or the
other transactions contemplated by the Merger Agreement.

Where substantially identical information required by Schedule 13E-3 is
included in more than one caption, reference may be made to only one caption of
the Proxy Statement.

CROSS REFERENCE SHEET
(PURSUANT TO GENERAL INSTRUCTION F TO SCHEDULE 13E-3)

ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT

1. ISSUER AND CLASS OF
SECURITY SUBJECT TO THE
TRANSACTION.

(a).............................................. Front Cover Page and "SUMMARY--Parties
to the Merger Agreement" sections of the
Proxy Statement are incorporated herein by
this reference.

(b).............................................. "SUMMARY--Parties to the Merger
Agreement" and "CERTAIN
INFORMATION ABOUT NCRR--
Shareholders; Changes in Control" sections
of the Proxy Statement are incorporated
herein by this reference.

(c),(d)......................................... "CERTAIN INFORMATION ABOUT NCRR--Market Price
of and Dividends on NCRR Common Stock"
section of the Proxy Statement is
incorporated herein by this reference.

(e).............................................. Not Applicable.

(f).............................................. Not Applicable.

2. IDENTITY AND BACKGROUND.
This Statement is being jointly filed by the North Carolina Railroad Company, the
North Carolina Department of Transportation ("DOT") and the Beaufort and
Morehead Railroad Company, a North Carolina corporation which is wholly owned
by the DOT.
(a)-(d),(g)..................................... "SUMMARY--Parties to the Merger Agreement"
section of the Proxy Statement is
incorporated herein by this reference.

ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT

(e),(f)......................................... To the best of the undersigneds' knowledge,
none of the persons with respect to whom
information is provided in response to this
Item was during the last five years (i)
convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors)
or (ii) a party to a civil proceeding of a
judicial or administrative body of competent
jurisdiction and as a result of such
proceeding was or is subject to a judgment,
decree or final order enjoining further
violations of, or prohibiting activities
subject to, federal or state securities laws
or finding any violation of such laws.
3. PAST CONTACTS,
TRANSACTIONS OR
NEGOTIATIONS.

(a)(1),(a)(2),(b).............................. "THE MERGER" and "CERTAIN CONFLICTS OF
INTEREST AND SHAREHOLDER DERIVATIVE ACTIONS"
sections of the Proxy Statement are
incorporated herein by this reference.

4. TERMS OF THE
TRANSACTION.

(a).............................................. "THE MERGER"; "SUMMARY OF SPECIAL COMMITTEE
PROCEEDINGS AND NEGOTIATIONS"; "REASONS FOR
APPROVAL OF THE MERGER AGREEMENT" and "ANNEX
A-- Agreement and Plan of Merger" sections of
the Proxy Statement are incorporated herein
by this reference.

(b).............................................. "THE MERGER" and "DISSENTING SHAREHOLDERS'
RIGHTS OF APPRAISAL" sections of the Proxy
Statement are incorporated herein by this
reference.

ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT

5. PLANS OR PROPOSALS OF THE
ISSUER OR AFFILIATE.
(a).............................................. "THE MERGER" section of the Proxy
Statement is incorporated herein by this
reference.

(b).............................................. None.

(c),(d),(e).................................... "VALUE TO STATE OF NORTH CAROLINA; PLANS OR
PROPOSALS OF THE STATE" and "THE CHARTER
AMENDMENTS AND THE BYLAW AMENDMENTS" sections
of the Proxy Statement are incorporated
herein by this reference.

(f),(g)......................................... "THE MERGER--Dequotation and Deregistration
of NCRR Common Stock" section of the Proxy
Statement is incorporated herein by this
reference.

6. SOURCE AND AMOUNT OF
FUNDS OR OTHER
CONSIDERATION.

(a),(c)......................................... "SUMMARY--Source of Merger Consideration" and
"ANNEX E-Legislation Authorizing" North
Carolina Railroad Acquisition" sections of
the Proxy Statement are incorporated herein
by this reference.

(b).............................................. "THE MERGER--Costs and Expenses of the
Merger" section of the Proxy Statement is
incorporated herein by this reference.

(d).............................................. Not applicable.

7. PURPOSE(S), ALTERNATIVES,
REASONS AND EFFECTS.

ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT

(a)-(c).......................................... "SUMMARY--Background of the Merger"; "THE
MERGER-Background of the Merger" and "REASONS
FOR APPROVAL OF THE MERGER AGREEMENT- Summary
of Reasons Alternatives to the Merger are
Less Attractive for Shareholders" sections of
the Proxy Statement are incorporated herein
by this reference.

(d).............................................. "THE MERGER--Certain Federal Income Tax
Considerations" and "THE MERGER-- The Merger
Consideration and Recommendations and
Reasons" sections of the Proxy Statement are
incorporated herein by this reference.

8. FAIRNESS OF THE
TRANSACTION.

(a),(b)......................................... "THE MERGER--The Merger Consideration and
Recommendations and Reasons"; "SUMMARY OF
SPECIAL COMMITTEE PROCEEDINGS AND
NEGOTIATIONS" and "REASONS FOR APPROVAL OF
THE MERGER AGREEMENT" sections of the Proxy
Statement are incorporated herein by this
reference.

(c).............................................. "SHAREHOLDER VOTE AND QUORUM REQUIREMENTS"
section of the Proxy Statement is
incorporated herein by this reference.

(d),(e)......................................... "SUMMARY--Special Committee of the Board of
Directors" and "SUMMARY OF SPECIAL COMMITTEE
PROCEEDINGS AND NEGOTIATIONS" sections of the
Proxy Statement are incorporated herein by
this reference.

(f).............................................. Not applicable.

9. REPORTS, OPINIONS,
APPRAISALS AND CERTAIN
NEGOTIATIONS.

ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT

(a)-(c).......................................... "OPINION OF THE SPECIAL COMMITTEE'S FINANCIAL
ADVISOR" and "SUMMARY OF SPECIAL COMMITTEE'S
PROCEEDINGS AND NEGOTIATIONS--The Special
Committee Proceedings" sections of the Proxy
Statement are incorporated herein by this
reference.

10. INTEREST IN SECURITIES OF
THE ISSUER.

(a).............................................. "SUMMARY--Vote Required for Approval; Quorum
Requirements"; "CERTAIN INFORMATION ABOUT
NCRR-- Shareholders; Changes in Control" and
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT" sections of the Proxy
Statement are incorporated herein by this
reference.

(b).............................................. Not applicable.

11. CONTRACTS, ARRANGEMENTS
OR UNDERSTANDINGS WITH
RESPECT TO THE ISSUER'S
SECURITIES.............................. The Merger Consideration NCRR-- Shareholders;
Changes in Control" and ANNEX B-The Charter
Amendments and the Bylaw Amendments" sections
of the Proxy Statement are incorporated
herein by this reference.

12. PRESENT INTENTION AND
RECOMMENDATION OF
CERTAIN PERSONS WITH
REGARD TO THE
TRANSACTION.

ITEM NUMBER AND CAPTION LOCATION IN PROXY STATEMENT

(a),(b)......................................... "THE MERGER--The Merger Consideration and
Recommendations and Reasons"; "REASONS FOR
APPROVAL OF THE MERGER AGREEMENT" and
"SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT" sections of the Proxy
Statement are incorporated herein by this
reference.

13. OTHER PROVISIONS OF THE
TRANSACTION.

(a).............................................. "DISSENTING SHAREHOLDERS' RIGHTS OF
APPRAISAL" section of the Proxy Statement is
incorporated herein by this reference.

(b).............................................. Not applicable.

(c).............................................. Not applicable.

14. FINANCIAL INFORMATION.

(a).............................................. "CERTAIN INFORMATION ABOUT NCRR--Selected
Financial Data" section of the Proxy
Statement is incorporated herein by this
reference.

(b).............................................. Not applicable.

15. PERSONS AND ASSETS
EMPLOYED, RETAINED OR
UTILIZED.

(a),(b)......................................... "GENERAL--Proxy Solicitation" and "THE
MERGER--Costs and Expenses of the Merger"
sections of the Proxy Statement are
incorporated herein by this reference.

16. ADDITIONAL INFORMATION. See text of the Proxy Statement.

17. MATERIAL TO BE FILED AS
EXHIBIT.

(a).............................................. Exhibit (a)(1) Legislation Authorizing North
Carolina Railroad Acquisition (incorporated
by reference to ANNEX E to the Proxy
Statement attached hereto as Exhibit (d)(1)).

(b).............................................. Exhibit (b)(1) Opinion of Financial Advisor
(incorporated by reference to ANNEX C to the
Proxy Statement attached hereto as Exhibit
(d)(1)).

Exhibit (b)(2) Special Committee Presentation
of Credit Suisse First Boston Corporation
dated October 3, 1997.

(c).............................................. Exhibit (c)(1) Agreement and Plan of Merger
dated October 3, 1997, among North Carolina
Railroad Company, Beaufort and Morehead
Railroad Company and the North Carolina
Department of Transportation (incorporated by
reference to ANNEX A to the Proxy Statement
attached hereto as Exhibit (d)(1)).

(d).............................................. Exhibit (d)(1) Preliminary copy of Letter to
Stockholders, Notice of Special Meeting of
Stockholders, Proxy Statement and form of
Proxy for the Special Meeting of Stockholders
of North Carolina Railroad Company to be held
on _____________, 19__.

(e).............................................. Exhibit (e)(1) Article 13 of the North
Carolina Business Corporation Act
(incorporated by reference to ANNEX D to the
Proxy Statement attached hereto as Exhibit
(d)(1)).

(f).............................................. Not applicable.

After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.

November 25, 1997 NORTH CAROLINA RAILROAD COMPANY

By: /s/ J. Bradley Wilson
____________________________
Name: J. Bradley Wilson
Title: Secretary

November 25, 1997 NORTH CAROLINA DEPARTMENT OF
TRANSPORTATION

By: /s/ Garland B. Garrett, Jr.
____________________________
Name: Garland B. Garrett, Jr.
Title: Secretary of Transportation

November 25, 1997 BEAUFORT AND MOREHEAD RAILROAD
COMPANY

By: /s/ Garland B. Garrett, Jr.
____________________________
Name: Garland B. Garrett, Jr.
Title: President

Exhibit Index

Exhibit Page
Number Description Number
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(b).............................................. Exhibit (b)(1) Opinion of Financial Advisor
(incorporated by reference to ANNEX C to the
Proxy Statement attached hereto as Exhibit
(d)(1)).

Exhibit (b)(2) Special Committee Presentation
of Credit Suisse First Boston Corporation
dated October 3, 1997.

(f).............................................. Not applicable.