BANGOR, Maine — The name Bangor and Aroostook Railroad, which has graced rail cars throughout the state for more than 100 years, will be gone next week, the Bangor News reported. The sale of the railroad, and other lines that make up the Bangor and Aroostook System, to Rail World Inc. of Illinois should be finalized Oct. 8 after no other bids to buy the system were received by a Tuesday deadline.
Rail World, a Chicago-based railway investment and management company, will change the system’s name to Montreal, Maine & Atlantic Railway if its $50 million offer is accepted by a federal bankruptcy court judge next week. The $50 million purchase price is down from a $62 million offer made late last year by Rail World, because the system continues to lose money and customers, according to the system’s president.
Under bankruptcy rules, the B&A System would have been sold through an auction if other interested buyers could prove that they could run the 835-mile operation better than Rail World, and submit a proposal that included a bid at least $2 million more than Rail World’s offer.
Other interested buyers had until 2 p.m. Tuesday to submit their offers, said Fred Yocum, president of B&A System. None were received.
Attorney Roger Clement, who represents the rail system’s bankruptcy trustee, said Tuesday that “a handful” of other companies had expressed interest in buying the rail system.
“We were surprised we didn’t receive any other bid,” Clement said. “We thought we would from one in particular.”
Clement would not name the other interested buyers.
B&A System includes B&A Railroad, the largest of all of the lines, and Canadian American Railroad Co., Quebec Southern Railway Co., Northern Vermont Railroad Co., Newport and Richford Railroad Co., Van Buren Bridge Co. and Logistic Management Systems Inc.
B&A System is not the only rail line Rail World is buying. On Monday, Rail World announced that it concluded an agreement to buy two Canadian Pacific Railway lines.
One line runs across the U.S.-Canadian border at Richford, Vt., and travels from Brookport, Vt., to St. Jean, Quebec, and another line runs north and south from St. Rosalie, Quebec, through Farnham, Vt., to Stanbridge, Vt. The St. Rosalie line previously was leased to Quebec Southern Railway, part of the B&A System.
The Canadian Pacific tracks will link with B&A System at Richford, Vt., and at Brookport, Vt., said Edward A. Burkhardt, president of Rail World Inc, in a statement.
“Canadian Pacific will be our main interchange connection, and we look forward to close cooperation in marketing joint [Montreal, Maine & Atlantic] and [Canadian Pacific] service through the Montreal gateway,” Burkhardt said.
B&A System has continued to operate at a financial loss, Yocum said in September. Administrative and priority expenses, which include lease payments on equipment, could total $15 million by the end of the year, he said.
Under the terms of a sale, tax liens to numerous towns in central and northern Maine will be paid first, according to the court documents. After that, administrative and priority expenses will be paid, and then other creditors.
Late last year, three other creditors, which collectively are owed more than $7 million, asked a U.S. Bankruptcy Court judge to place B&A Railroad under his jurisdiction after being promised payments but not receiving them. The entire B&A System filed for bankruptcy last spring.