What's next for MMA?

[MEC407]

From The Portland Press Herald:

Rail line’s bleak outlook a challenge for Maine

With the return of service to Lac-Megantic in doubt, the state is faced with losing an important economic link.

By Tom Bell
Staff Writer

LAC-MEGANTIC, Quebec — Motorists here still stop at the railroad tracks and look both ways.

Such are the habits of people living in a town built around a transcontinental railway.

But nobody has seen or heard a freight train since the riderless “ghost train” hauling crude oil rolled into town on July 6 and exploded, killing 47 people and destroying 40 buildings downtown.

The rail line has been blocked while crews work to clean up 1.5 million gallons of spilled oil and remove debris.

While trains could be allowed to pass through within a few months, the long-term prospects for rail here are uncertain.

What happens in Lac-Megantic has ramifications in Maine, where the rail line is a link between Maine lumber and paper mills and their customers throughout North America.

At issue is not the survival of the line’s bankrupt owner, Montreal, Maine & Atlantic Railway, which is looking for a buyer, but whether the line can be run as a sustainable business under any owner, given its scattered customer base, high fixed costs and daunting political obstacles.

Read more at: http://www.pressherald.com/news/rail-li ... 08-19.html" onclick="window.open(this.href);return false;

[fogg1703]

Without knowing the specifics of Chapter 7 or Quebec law, could a "buyer" (ie CP or Irving) propose to the feds that they will pay for the cleanup with the agreement of purchasing the MMAC for $1? The MMA could then be sold off by Burkhardt to satisfy the remaining creditors and if that sale cannot cover the debts, then other legal options would be taken. Seems to me that it could be a win for all parties with clean up costs covered, Quebec off the hook and a new operator in place to instill a little bit of confidence in rail shipments agin through Lac Megantic. Just a thought......

[Gilbert B Norman]

Mr. Fogg, while I'm not a lawyer nor play one on TV (but am a retired CPA who was involved with a bankruptcy or two along the way), anything is possible. US law provides wide discretion to Bankruptcy Courts; they are far more a 'court of equity' than law. Of course any party is 'absolutely certain' they're getting 'sc---ed' or otherwise 'adversely affected'. Case in point: the Madoff and Lehman Brothers bankruptcies.

But the fact remains that there are hardly assets, including maxing out the insurance proceeds, in either the US or Canadian company, to satisfy all claims (be it a person maimed for life or Tom's Plumbing of Herndon Maine for a $150 service call at the Yard Office).

But with the disproportionate representation small states enjoy in the US Congress, and with the sobbing from on line industries (if we lose the railroad, our family owned lumber mill will be out of business and fifty guys will be out of work, sob sob) some kind of service will be provided (Irving Oil has alternatives that have been addressed at this topic), but settling the Estates of MMA and MMAC will be a lengthy process (I think the only way the claimants, as distinct from trade creditors, will be whole is with a taxpayer bailout - US and/or CA); I for one, do not expect to be around to see the final Discharge.

[Zeke]

Reading one of the news links posted here it stated between lac Megantic and Brownville jct ,a distance of 117 miles, there is only one MMA customer near Jackman. No wonder the CP bailed out of the east. Someone posted on this board at the time CP was running 3 eastbound and 3 westbound freights a day. I thought the CP might be lured back to the east. However, with that much railroad to maintain and the dearth of traffic it appeared the CP made the right move, for the shareholders, in getting out when they did. Im guessing now the state and the Irving combine will probably find a way to keep the Moosehead in operation.

[F-line to Dudley via Park]

Reading one of the news links posted here it stated between lac Megantic and Brownville jct ,a distance of 117 miles, there is only one MMA customer near Jackman. No wonder the CP bailed out of the east. Someone posted on this board at the time CP was running 3 eastbound and 3 westbound freights a day. I thought the CP might be lured back to the east. However, with that much railroad to maintain and the dearth of traffic it appeared the CP made the right move, for the shareholders, in getting out when they did. Im guessing now the state and the Irving combine will probably find a way to keep the Moosehead in operation.

Oh, I'm sure MEDOT is readying its bid for the track ownership right this second and that that purchase will be made long before the new operator takes over and/or picks clean MMA's carcass. They've been aggressively moving to get as much acquirable private track in their borders under public control as they can, as evidenced by the buyout of all remaining fringe MMA trackage earlier this year. And they are building a warchest to eventually buy PAR's half of the Brunswick-Lewiston route for expansion of passenger service. So this is a situation where given the emergency nature the funds can/will appear out of thin air to make it happen. For one, because the state is never ever going to get a better price for that many track miles with that much thru connectivity. It's a true going out of business sale...everything must go! And don't think even if the freight business is dodgy going forward that they won't pull out the stops to prop it up. This was VIA Rail's passenger route for the Atlantic until 1994, with 7 stops in Maine en route between Montreal and Halifax: Jackman, Greenville, Brownville Jct., Penobscot River, Mattawamkeag, Danforth, and Vanceboro. They want that train back badly, and so does New Brunswick. This is a crucial long-term hold for them to acquire, stabilize, and preserve in-service even if it's going to take years and years to get track conditions in acceptable shape for passengers.

[mwhite]

As far as online customers, Irving would be the best operator. Note that yesterday they announced they are going to invest $30M in rebuilding a sawmill facility in Ashland - directly located on rail they operate. I'd be surprised if anyone else has the resources to turn around rail facilities like they do. Also, our State is pretty broke these days, so I'm not sure where they'd find the funds to purchase the lines.

[CPHOG]

This might help



http://ca.finance.yahoo.com/news/irving ... 35799.html" onclick="window.open(this.href);return false;

[Cowford]

Would someone here be able to elaborate on Irving's potential, i.e., what commodities (and related carload volume) has Irving been moving over the old Moosehead (aside from crude)? And where's it going to (or coming from)? Canada or lower 48?

[gpp111]

If Irving took over the MM&A, it would be a godsend. They have the financial resources, expertise, and access to shippers that no one else possesses. The largest refinery in Canada is in St John and owned by the Irving clan. Also one of the largest paper mills in Canada is located there and also owned by Irving. Irving owns 2 million acres of timber in Maine as well as several saw mills and acquired the northern Maine ex BAR assets there to move fiber to St John and lumber south. Irving would send more traffic over the MM&A if they owned it, preserving their connection with CP and keeping rates low on Pan Am and CP. So it looks like two scenarios, Irving buys the whole thing for a song, or the Moosehead is rail banked, or abandoned. I think the Quebec and State of Maine would feel coonfident with an Irving operation, but it is another thing to convince Lac Megantic residents to allow oil trains to pass through town once again.

[CN9634]

I wonder how much value the MMA right of way and real estate properties hold for potential future Irving projects... I'm not sure they have enough for a pipeline but who knows..

[Cowford]

What do you put the chances of Irving (or anyone for that matter) getting a pipeline approved on that route? Given it A. would not directly benefit a US company; B. likely offer the potential to carry oil sands crude; and C. would run through the People's Republic of Maine, I'd say slim to none.

I think the CP line is (and should be) finished, but I'm really rooting for an Irving consolidation up there.

[S1f3432]

I read somewhere recently that TransCanada was planning to run a pipeline over the top of Maine to St.John. While these articles don't
specifically say that, one of them does mention port facilities at Quebec City:

http://www.cbc.ca/news/canada/montreal/ ... t-842.html" onclick="window.open(this.href);return false;

http://www.transcanada.com/6246.html" onclick="window.open(this.href);return false;

[Zeke]

The Canadian Transportation Agency,or CTA for short, has ordered the Canadian Pacific to lift it's August,13 interchange embargo of the MMA. The CP embargoed the MMA citing it lacked adequate insurance and the inability to safely handle Haz/Mat traffic. EHH himself said " We don't agree with the CTA but it's the law and we will comply."
If this wreck wasn't such a tragic event for the people of Lac Megantic and the employees of the MMA it would rank up there on the list of all time convoluted RR soap operas.

[MEC407]

Thanks for the info Zeke. Here is an article with more information from The Globe and Mail:

The Canadian Transportation Agency has ordered Canadian Pacific Railway Ltd. to reinstate its delivery of crude oil tankers and other rail cars to the embattled Maine railway at the centre of the Lac-Mégantic derailment, despite CP’s concerns about “serious and alarming risks.”
. . .
In a letter to CP yesterday, the CTA said: “The Agency finds that, on balance, MMA will suffer irreparable harm as a result of CP’s Embargo.”

"While we disagree with this order, we have taken immediate steps to comply,” Hunter Harrison, Canadian Pacific chief executive officer, said in a statement.

“The CTA, as federal regulator, has satisfied itself that MM&A is fit to operate and has adequate insurance to do so. We will review our legal options.”

Read more at: http://www.theglobeandmail.com/report-o ... e13912041/" onclick="window.open(this.href);return false;

[MEC407]

And here is an article from today's Portland Press Herald regarding MMA's continued use of one-man crews in the U.S.:

The nation’s top railroad administrator is “shocked” that Montreal, Maine & Atlantic Railway has not adopted a policy of using two-person crews on its trains in the U.S., according to a letter he sent Wednesday to the Maine-based company.

In his letter, Federal Railroad Administration Administrator Joseph Szabo said he expects the railroad to stop manning trains with a single crew member.

“In the aftermath of the Montreal, Maine & Atlantic derailment at Lac-Megantic, Canada, I was shocked to see that you changed your operating procedures to use two-person crews on trains in Canada, but not in the United States,” the letter says. “Because the risk associated with this accident also exists in the United States, it is my expectation that the same safety procedures will apply to your operations here.”

Read more at: http://www.pressherald.com/news/US-rail ... crews.html" onclick="window.open(this.href);return false;