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RailAmerica sells three Alberta short lines to CN


During the past few years, Class Is have been selling or leasing a number of branch lines to short-line holding companies, who’ve formed new small roads to operate the lines. But RailAmerica Inc. has completed a transaction that’s the opposite of that trend — and shaves the company’s Canadian short-line holdings to four.

Yesterday, RailAmerica announced it sold the Central Western (CWR), Lakeland & Waterways (LWR), and Mackenzie Northern (MKNR) railways to Canadian National Railway Co. for $22.2 million and up to $3.4 million in future payments based on business development. CN expects to integrate the Alberta short lines into its operations in less than six months.

RailAmerica will use sale proceeds to reduce bank debt and “create financial capacity to acquire railroads that fit our criteria,” said RailAmerica Chief Executive Officer Charles Swinburn in a prepared statement.

CN interchanges with the 21-mile CWR in Munson; 120-mile LWR in Edmonton; and 600-mile MKNR in Smith. Last year, the short lines moved a total of 50,000 carloads and generated $26 million in revenue.

CN plans to upgrade MKNR’s and LWR’s track to handle increasing traffic in several commodities, including oil and gas infrastructure building materials, oil sands by-products, minerals, and forest and grain products.

“While future traffic growth prospects for the railroads are good, taking advantage of them would require significant capital investment,” said RailAmerica President Donald Redfearn. “We determined that the prospect for using that capital to earn returns that meet our targets are better achieved at other railroads we own.”

RailAmerica now owns and operates 43 regionals and short lines in the United States and Canada. The company’s remaining Canadian holdings include the Cape Breton & Central Nova Scotia, Goderich-Exeter, Ottawa Valley and Southern Ontario railways.

Contact Progressive Railroading editorial staff.

More News from 1/20/2006