1 March 2006
Rail Deal Expected to Close by Summer
The final stage in the takeover of the E&N Railway by the Island Corridor Foundation should be
concluded by this summer, a spokesman for the non-profit group said Tuesday.
Final negotiations with RailAmerica are down to legal language, said Bill McElroy, the group's executive director.
Earlier this week, the foundation, consisting of five regional districts and five First Nations, concluded a deal to take over Canadian
Pacific Railway's portion of the E&N Railway. The CPR handed over assets valued at $236 million and donated $2.3 million in seed
money to the foundation in return for a tax write-off.
RailAmerica, through its E&N Railway subsidiary, owns sections of the railway, including a spur line from Port Alberni to
Parksville, and a stretch from Parksville to south of Nanaimo.
The company operates a freight service on the main line and it runs the Dayliner passenger service, between Victoria and Courtenay,
under a contract with VIA Rail.
The deal will call for the foundation to pay RailAmerica an undisclosed sum, plus the company will benefit from a tax
write-off similar to CPR's, McElroy said.
Meanwhile, the railway service will continue without interruption, he said. Rail America has agreed to maintain its service for a
four-month period after a transfer agreement is finalized.
This will allow a new unidentified rail operator from "somewhere in western North America" to phase in its operations, McElroy
said.
"I am confident by the summertime this will all be in place."
Shawn Smith, project manager for RailAmerica's E&N subsidiary, said the company intends "to close the deal very, very
shortly."
RailAmerica, based in Boca Raton, Florida, has made a business decision to cluster its operations in various parts of North America.
After selling three short-line railways in Alberta last month, its Vancouver Island operation was "orphaned,"
Smith said from his Nanaimo office.
The company initially indicated plans to sell its Island interests after forestry company Norske Skog decided in 2001 to discontinue its
pulp shipments on the Port Alberni spur line.
The remaining freight business is limited largely to three companies shipping propane, silicates, and agricultural feeds between
Courtenay and Duncan.
The E&N employs 21 people in the freight business and to run the daily passenger service, which currently receives an annual
subsidy of almost $2 million from VIA Rail.
McElroy said the federal Crown corporation has committed to continue this under the new operator.
The operator also plans to expand service to include commuter trains, he said.
Judith Sayers, who co-chairs the Island Corridor Foundation, said the group is hoping to get federal and provincial help
with the estimated $35 million to $40 million worth of infrastructure improvements needed to upgrade the railway.
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