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COMPETITION WATCH: CN purchases RailAmerica’s Alberta short lines

EDMONTON, Alta.-- CN has purchased and begun operating the Alberta short-line railways owned by RailAmerica, Inc., ...

EDMONTON, Alta.– CN has purchased and begun operating the Alberta short-line railways owned by RailAmerica, Inc., of Boca Raton, Fla., for C$26 million in cash. In addition, RailAmerica may receive up to C$4 million in future payments, depending on the development of new business on the acquired railways.

CN is buying the Mackenzie Northern Railway (MKNR) and the Lakeland & Waterways Railway (LWR), both located north of Edmonton, following RailAmerica’s decision to divest its Alberta short lines. Also included in the transaction is the Central Western Railway (CWR), a 21-mile railway in east-central Alberta used largely for training purposes that also carries a small amount of agricultural traffic, says the company.

Except for a small part of the CWR, all of the lines connect with CN’s network. CN says it plans to upgrade MKNR and LWR trackage to improve customer service and rail efficiencies, and to maximize the lines’ potential for hauling larger volumes of oil and gas infrastructure building materials, oil sands by-products, minerals, and forest and grain products in northern Alberta.

The company says the feeder lines are a good fit for CN’s merchandise and bulk commodity businesses at a time of major energy project development in northern Alberta. Operating the LWR will strengthen CN’s connection to the Alberta Oil Sands, while the MKNR component will allow CN to participate directly in the proposed natural gas pipeline projects and give the company access to modern on-line grain elevators and pulp plants, CN says.

The 600-mile MKNR runs north from Smith, Alta., located about 130 miles north of Edmonton, to Hay River, N.W.T. The LWR, which connects with CN in the Edmonton area, has 118 miles of track and extends to Boyle, Alta., where it in turn connects with the Athabasca Northern Railway. The Central Western Railway, in east central Alberta, links with CN near Drumheller, Alta.

CN says it will honour the existing collective agreements of the acquired railways. Integration of the properties into CN is expected to take less than six months.

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