Four-way pact will resolve key issue surrounding EJ&E transaction in Indiana, CN says (6/30/2008)


A four-party preliminary memorandum of understanding concerning a rail line relocation associated with the expansion of Gary/Chicago International Airport (GCIA) should resolve a key concern raised in opposition to Canadian National Railway Co.'s proposed acquisition of the Elgin, Joliet & Eastern Railway Co.'s (EJ&E) principal lines, according to the Class I.

The EJ&E, GCIA, CSX Corp. and Norfolk Southern Corp. signed the memorandum. The joint agreement calls for relocating the EJ&E line, building a bridge over an existing NS branch line and constructing a grade separation.

Although CN is not a signatory, the railroad is "committed to honor its terms upon regulatory approval of its EJ&E acquisition by the Surface Transportation Board (STB) and its assumption of control of the EJ&E lines," CN officials said in a prepared statement.

"This agreement should mean the STB need not invest additional time and resources in examining concerns that had been raised by GCIA and others about the potential impact of our proposed purchase of the EJ&E on the GCIA's operations and expansion plans," said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "We hope that resolving these issues ... will help to expedite the STB's overall review of our transaction."

CN is seeking STB approval to acquire the EJ&E's principal lines for $300 million. The Class I plans to spend an additional $100 million to upgrade the EJ&E and construct new connections, and is "prepared to invest" up to $40 million to complete various mitigation measures associated with the transaction, CN said.

Source: Progressive Railroading Daily News