RailAmerica to "Dispose" of E&N Railway

Trains Magazine General Discussion
1

RailAmerica has annouced they are shutting down the Esquimalt and Nanaimo Railway in early 2005 due to continued loss of freight traffic. The E&N has been experiencing a decline in freight traffic since they lost the Port Alberni Pulp Mill in late 2001. This does not mean that the E&N will be abandoned, as RailAmerica may be able to find a buyer for the E&N.

RailAmerica to Take Impairment Charge in the Third Quarter

BOCA RATON, Fla.–(BUSINESS WIRE)–Sept. 30, 2004–RailAmerica, Inc. (NYSE:RRA), announced today that it will take a pre-tax non-cash charge of approximately $12 million to $13 million, ($7 million to $9 million after-tax) in the third quarter of 2004 due to its decision to dispose of its E&N Railway in British Columbia, Canada.

RailAmerica purchased the 181 mile E&N Railway in 1999 from Canadian Pacific for $11 million. The Company is currently reviewing several alternatives for disposing of the railroad.

“We continually review the performance and capital needs of each of our 46 railroads,” said Charles Swinburn, Chief Executive Officer of RailAmerica. “The E&N Railway has been experiencing declining carloads over the past two years and is no longer viable. We are evaluating our options for dealing with the property, and expect to dispose of it during the first half of 2005.”

2

Maybe they should do some transloading instead. Maybe that would attract more customers and increase carloads that way.

3

I suppose this is not surprising. Hope for the best…

4

There’s a company trying to take over the E&N, but that’s all I can tell you.

5

This seems to be Railamerica’s policy,buy a shortline,then sell or abandon it.

6

Maybe I shouldn’t have Swinburn on my pretend board of directors. He sounds like a money waster.

7

That’s too bad.

I hope someone else trys to make a go of it, it would be too bad to see that right-of-way abandoned, because once it’s gone, it really is gone.

8

Maybe if someone does manage to keep it running they should rename it BC Rail !!!

9

What RailAmerica is actually doing is writing the E&N out of their books in order to sell the line. They want almost 20 million dollars for their portion of the E&N. Who knows how much CP will want. But THE RAILWAY WILL CONTINUE TO OPERATE until:

A) RailAmerica finds a buyer and transfers the E&N over to the new operator

Or…
B) After a certain period of time with no takers for the E&N, RailAmerica will effectively abandon the E&N Railway, the land will go back to the crown including the E&N land grants and CP will loose everything.