RailAmerica to terminate of OVR lease with CP
Written by admin
RailAmerica, Inc. says its subsidiary RaiLink Canada Ltd. has closed on a transaction with the Canadian Pacific Railway to terminate its lease of the Ottawa Valley Railway line. Under the terms of the agreement, RailAmerica, Inc. received C$73 million in gross proceeds. The company estimates net cash proceeds after taxes and transaction related expenses of C$69 to C$70 million.
RailAmerica’s subsidiary
will terminate its lease of the CP-owned OVR rail line between Smiths Falls and
Camspur, near Petawawa, Ont., effective upon clearance of the remaining cars
from the line. Under the Canada Transportation Act, CP has 60 days to decide if
train service will be restored on the line. RailAmerica’s subsidiary will
continue to maintain and operate the CP-owned rail lines between Sudbury and
Mattawa, Ont., Mattawa and Temiscaming, Que., and Mattawa and Camspur until
dates in 2010 to be determined by CP.
The OVR operation consists
of 342 main line miles of track and primarily transports bridge traffic, chemicals
and pulp and paper products. For the nine months ended September 30, 2009,
total revenue for OVR was C$13.3 million, operating income was C$4.6 million,
depreciation/amortization expense was C$0.4 million and capital expenditures
were C$0.7 million. The company will record the income or loss from these
operations in discontinued operations beginning in the fourth quarter of 2009.
