Saturday, February 15, 2014

Central Maine & Quebec Railway

Bankruptcy judges in Quebec and Maine have approved the sale of the insolvent Montreal, Maine & Atlantic (MM&A) railway involved in July 6, 2013 deadly accident in Lac-Megantic, Quebec, that claimed 47 lives.

Montreal, Maine & Atlantic filed for bankruptcy on August 7, 2013. Railroad Acquisition Holdings, an affiliate of New York-based Fortress Investment Group, will pay US$16.85 million for the entire network in both countries.

[ Ed note:  News reports vary wildly over the purchase price. Indeed, Robert Keach, the railroad company’s trustee in its bankruptcy proceedings, said he made a typo in first reporting the sale prince. He confirms the sale was for USD$16.85 million. (from Bangor Daily News)]

In addition, more than US$1.6 million is expected to be received from the dispersal of 25 locomotives to other buyers. Make note of this statement, we revisit this statement later.

So the disgraced MM&A passes into the history books.

The new name will be Central Main & Quebec Railroad.

Railroad Acquisition Holdings plans to finalize purchase "details" by the end of March, 2014.

So how did we get here?

It all began in an exciting time of Canadian rail expansion. The Canadian Pacific Railway (CPR) Company was incorporated on February 16, 1881 and was charged with completing the  transcontinental railway  the federal government had initiated a decade earlier.

Completed in 1885, regular train service between the company’s eastern terminus in Montreal and its western terminus in Port Moody, British Columbia began in 1886.

Eastward expansion from Montreal, across the state of Maine, to Saint John, New Brunswick, was completed in 1889.

Fast forward

On September 1, 1988, Canadian Pacific formed an operating division, named the Canadian Atlantic Railway (CAR.)

CAR was the old CPR Atlantic Division mainline east from Sherbrooke, Quebec, through the State of Maine, and into the Province of New Brunswick. CAR was given control over all CP lines southeast of Montreal to Saint John and other points.

During the early 1990s, Canadian National and Canadian Pacific, under the influence of "kumbaya," discussed a range of options to rationalize ( read: downsize) their respective eastern networks including a merger of the two networks and proposals by each carrier to purchase the assets of the other.

Kumbaya wore off; ultimately the scenarios did not prove viable.

CP proceeded over a number of years to rationalize (read: downsize) its entire eastern network including all of its lines east of Montreal, with the routes operating across Maine and New Brunswick to the port of Saint John (operating as the Canadian Atlantic Railway) being sold or abandoned.

The Canadian Pacific main line west of Brownville Junction, Maine west toward Montreal, along with the north-south Bangor Aroostook Railroad, were acquired by the Iron Road Railways, Inc. and operated as the Canadian American Railroad.

Despite strong efforts to become viable, this operation started bankruptcy proceedings in 2002. In 2003, a new group, Edward Burkhart's Rail World, Incorporated  acquired the Iron Road Railways and began operations as the Montreal, Maine & Atlantic Railway.

• On July 6, 2013, a suspected operational error resulted in a runaway train, which darn near destroyed a town.

• On August 7, 2013, Ed Burkrhart's MM&A declared bankruptcy.

• On February 13, 2014, A U.S. Bankruptcy Court approved a tentative sale agreement with Railroad Acquisition Holdings.

And that's how we got here.

I am curious.

If there will be an operating "Central Maine & Quebec," how can it operate without motive power?  After all, news accounts clearly reflect income of USD1.7M from the "dispersal" of 25 locomotives.

Or is Central Maine & Quebec a "name of convenience" for liquidation of the plant?

Further speculation is found in the Sunday February 16, 2014 "Portland Press Hearld." The Telegraph is overlooking the dilapidated run from Montreal to Searsport. That's why most of the line, with it's cracked rail top, beat up ties with grass growing up between them, ran under restricted speed.

It simply is not capable of handling weight.

Remember the photo of the Lac-Mégantic Public Library reduced to ashes? The library society received a tsunami of books from people in Canada, United State and Europe.

Financial assistance to build a new edifice was also overwhelming.

They hope to be moved into their new building this year.

And a pleading with kind folk, "Stop sending books!"

1 Comments - Click here:

Anonymous said...

Name of convinience for the liquidation of the plant or for the new startup? Nothing blocks the new owner from buying its own power instead of taking over the MMA's old workhorses. MMA bought used GEs, because they were cheaper than EMDs. On the other hand, whoever the manufacturer they pressed the lemon too much.

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