(Reuters circulated the following on November 3.)
VANCOUVER, B.C. — Canadian National Railway Co. will pay C$50 million ($42.2 million) for three Eastern Canadian rail lines it sold in the 1990s, echoing repurchases it has made in Western Canada, the company said on Monday.
CN, Canada’s largest railway, said it will also spend an unspecified amount of money to upgrade locomotives and 865 km (540 miles) of track on the lines in Ontario, Quebec and New Brunswick being bought from Quebec Railway Corp.
The deal also includes Quebec Railway’s rail ferry across the St. Lawrence River.
Canadian National is a “totally different company” with more efficient operations than when it sold the lines as unprofitable or unneeded for its core network, spokeswoman Julie Senecal said.
“The economic rational back in the 1990s was not the same as it is today,” Senecal said.
Senecal said the track being repurchased is in good condition. Quebec Railway was given government aid in 2007 to upgrade track that shippers and CN wanted to be able to handle higher capacity rail cars.
The three eastern lines are the Ottawa Central Railway, New Brunswick East Coast Railway and Chemin de fer de la Matapedia et du Golfe. CN will also take over management duties at the Chemin de fer de la Gaspesie.
The three lines employ about 214 people, but CN said no immediate workforce changes were planned. The lines are also used by Via Rail for passenger service.
The ferry deal is also a repurchase of sorts for CN, since it has maintained a minority stake in operation since it was started in 1975.
In a separate deal, Quebec Railway sold its Sydney Coal Railway in Nova Scotia to Logistec Corp (LGTb.TO: Quote, Profile, Research, Stock Buzz). Logistec is a 16 percent owner of Quebec Railway and expects to get C$11 million from the asset sales after offsets.
Canadian National has made similar repurchases of rail lines in Western Canada that it sold in the 1990s when the government made it easier for CN and Canadian Pacific Railway to spin off branch lines to new shortline owners.
The purchase also comes as Canadian National waits for a U.S. court to rule if it will order a hearing on whether to order regulators to rule by the end of the year on CN’s planned purchase of the Elgin, Joliet & Eastern Railroad.