Canadian Pacific buying former Maine rail line involved in 2013 Quebec disaster
Courtesy / Central Maine & Quebec Railway, Harry Gordon
The Central Maine & Quebec Railway, a Bangor-based freight line whose predecessor was involved in a disastrous 2013 derailment, is being purchased for $130 million.
The former Montreal, Maine & Atlantic Railway, whose runaway freight train created an inferno killing 47 people six years ago in Lac-Mégantic, Quebec, may soon have a new owner.
An affiliate of Fortress Investment Group, which after the disaster purchased and renamed the rail line Central Maine & Quebec Railway, is now selling it to Canadian Pacific (TSX, NYSE: CP) for $130 million, according to filings last week with the Securities and Exchange Commission.
The deal is expected to close by the end of the year. Central Maine & Quebec, headquartered in Bangor, owns 481 miles of track, primarily in Maine and Quebec.
Fortress paid $14.25 million at auction for the Montreal, Maine & Atlantic, which declared bankruptcy in August 2013. Fortress relaunched it in 2014. Over the past five years, the New York-based investment group has spent about $55 million to rebuild the rail operator as well as its tracks and rolling stock, according to an industry publication.
The reconstruction included safety improvements in response to the July 6, 2013, accident, in which a parked train carrying crude oil rolled downhill and derailed in Lac-Mégantic, about 10 miles from the Maine border near Jackman. The deadly fireball that resulted destroyed much of the small Quebec town’s center and caused over $200 million in damage.
With the acquisition, Canadian Pacific regains a 263-mile portion of track, extending east from Quebec to Brownville Junction in Maine, that the company owned until the late 1990s. The stretch, along with the former Bangor & Aroostook line between Millinocket and Searsport and a short line in Vermont, were spun off and after several ownership changes eventually became the Montreal, Maine & Atlantic.
"This strategic acquisition gives CP a true coast-to-coast network across Canada and an increased presence in the eastern U.S.," said CP President and CEO Keith Creel in a news release. "With additional port access, more dots on the map, and our proven precision scheduled railroading operating model we are confident this transaction will bring benefits to all stakeholders moving forward."
Canadian Pacific reported revenues of over $7 billion in 2018, and employs 12,700 people.
Maine Department of Transportation Bruce Van Note said in a prepared statement, “The return of a Class 1 railroad to our state provides for more competitive shipping options and more seamless access to national rail routes for the Port of Searsport and businesses in Maine: better transportation connections to the larger rail system provide better economic opportunities for the state.”
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