Montreal Maine & Atlantic locomotive number 3097 at Farnham, Quebec - Date/Photographer unknown.
19 March 2014
Canadian Authorities Holding Up Sale
of Bankrupt Maine Railway
Bangor Maine USA - American authorities have approved it, but the US$15.85 million purchase of the Maine railroad forced into bankruptcy by the disastrous Lake Megantic derailment last year is delayed, possibly until June, while Canadian authorities review the sale, the railroad's court-appointed trustee said Tuesday.
The Canadian Transportation Agency and Transport Canada are still reviewing the purchase that would create the Central Maine & Quebec Railway from Montreal Maine & Atlantic Railway (MMA) of Hermon, said Robert Keach, MMA's trustee in the bankruptcy proceedings.
"The delay is considered routine, and in fact, the contingency for such a delay was built into the asset purchase agreement," Keach said in an email on Tuesday.
"All relevant insurance has been extended to 1 Jun 2014, and the current financing is sufficient to cover the anticipated delay."
"I do not expect any impact on operations from the delay, and we expect prompt action by the regulatory authorities," Keach added.
The federal Surface Transportation Board, which is the American regulatory agency overseeing the sale, approved it with a court filing on Tuesday, Keach said.
MMA filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court in Bangor on 7 Aug 2013, a month after one of its trains rolled driverless down a hill before derailing in the middle of the town of Lake Megantic causing an explosion that killed 47 people on 6 Jul 2013.
The Hermon-based railroad laid off 79 company workers, including 60 Americans, out of its approximately 120 employees in the wake of the runaway train disaster.
About 30 were hired back thanks partly to a loan the company secured that would allow it to run through February.
Keach has said the sale is proceeding with the understanding that the company would hire to fill most of the positions vacated by the layoffs.
Central Maine & Quebec is a subsidiary of New York investment firm Fortress Investment Group, which won a bankruptcy auction for the bankrupt MMA's assets on 21 Jan 2014.
It had expected the sale to be complete by the end of March.
John Giles, a consultant for Fortress and expected CEO of the new railway freight service, said in proposed sale documents released in January that the new railroad would have annual revenue exceeding US$5 million, but not more than US$22 million, and would "seek to recapture traffic formerly transported by MMA, which may have been diverted to motor carriage as a result of the interruption of MMA service following the Lake Megantic disaster."
It remains unclear if those projected revenue figures are gross or adjusted.
MMA's historic gross revenue exceeded US$22 million, especially after the railroad began carrying crude oil.
In 2012, the first full year MMA carried crude oil, it posted US$36 million in gross revenue, Keach has said.
The year before, it posted US$24 million.
Keach said in January that roughly 20 potential buyers, including Railroad Acquisition Holdings, emerged in the process to secure a stalking horse, some of whom visited the railroad company's operations to peruse the assets.
Nick Sambides Jr.