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10/31/2007



Rail News: Rail Industry Trends

CN seeks STB blessing to acquire a major portion of the Elgin, Joliet & Eastern



Canadian National Railway Co.'s application to acquire the Elgin, Joliet & Eastern Railway Co.'s (EJ&E) principal rail lines is on file at the Surface Transportation Board (STB).

The Class I is seeking regulatory approval to acquire a major portion of the 198-mile regional, which operates a mainline that encircles Chicago and reaches Waukegan, Joliet and South Chicago, Ill., and Gary, Ind. CN plans to name the operations the EJ&EW West Co.

Last month, CN reached a deal with U.S. Steel Corp. to acquire most of the EJ&E for $300 million, subject to STB approval. The Class I has asked the board to consider the acquisition a minor transaction, which would enable CN to assume control of the EJ&EW in mid-2008.

The Class I plans to invest about $100 million to integrate the regional, build connections, improve infrastructure and expand capacity on the EJ&E.

"The EJ&EW would provide the 'missing link' to connect CN's five existing lines entering Chicago, filling a void in its network that has caused the company delays and higher costs," said CN President and Chief Executive Officer E. Hunter Harrison in a prepared statement. "The acquisition would result in improved reliability and service to both CN and EJ&EW customers."

The transaction also would advance several of the Chicago Region Environmental and Transportation Efficiency Program's (CREATE) broad objectives, CN said. The city of Chicago could more quickly meet its goal to vacate trains on CN's St. Charles Air Line than under CREATE's Central Corridor scenario. In addition, CN would use private dollars to produce re-routing benefits in the near term — saving taxpayers money and lessening community disruption caused by construction of CREATE's Central Corridor — and work closely with Metra and Amtrak on commuter- and passenger-rail operations.


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