Bankruptcy Court Approves Assets Sale of Railroad Company Involved in Canada Disaster
By Esther Tanquintic-Misa | January 24, 2014 2:01 PM EST
A bankruptcy court in the U.S. has approved the assets sale of Montreal, Maine and Atlantic Railways (MM&A), seven months after it figured in a fiery railway crash in Lac-Megantic, Quebec that killed 47 people.
Railroad Acquisition Holdings LLC, an affiliate of New York-based Fortress Investment Group, former owner of one of the largest short-line railways in the U.S., has been approved to purchase the insolvent MM&A railway at US$15.85 million for the entire network in both countries.
The Fortress group targets to close its purchase by March 31.
The amount however is still not enough to cover debts to creditors as well as pay the victims of the July 2013 rail disaster.
"It's a fair price for the railroad given the changing landscape following several other railroad oil spills, the prospect of higher insurance premiums and an uncertain regulatory future," the AP quoted U.S. federal bankruptcy trustee Robert Keach as saying.
"We think this is a very good sale for the state of Maine, for the region, for the railroad. Fortress is a proven operator. They have access to capital and I think this will ultimately be a very good thing for the state and for the railroad," he added.
MM&A operates 770 kilometres of track in Maine, Vermont and Quebec.
Fortress operates short-line railways including Florida East Coast Railway. It used to hold a 60 per cent stake in Rail America before it was sold two years ago.
There were more than 40 potential bidders that expressed interest to purchase all or parts of the MM&A. Only 18 however signed confidentiality agreements to gain access to internal financial numbers.
Fortress was the lone bidder for the entire network.
"They certainly have committed both to the court and to us that they intend to operate on both sides of the border and that's a good thing," Mr Keach said.
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