CENTRAL MAINE & QUEBEC RAILWAY (CMQ) — New Owner of MMA

[mtuandrew]

OK volks, where is this physical interchange with CSX?

This map would suggest there is none:

http://www.mmarail.com/downloads/mma_rail_map.pdf" onclick="window.open(this.href);return false;

This topic also suggests there is none ('talk the talk' yes):

viewtopic.php?f=47&t=41002

If there were such through Adirondack Jct to the NYC Adirondack Division line thence to Utica and the Water Level Route, this could represent a competitive routing to Norfolk Southern and 'barroom buddy' Boston & Maine.

I'm at a loss - and this enquiring mind wants to know.

Anyone?

Currently there is no connection. The wye at Adirondack Jct (CP) has been pulled up and the remaining line across the Kahnawake Nation is dormant not abandoned to Beauharnois. CSX I believe owns the line Salaberry-de-Valleyfield QC to Adirondack Jct as they purchased it from CN in 1993 in order to service the large industrial park (PPG plant) in Beauharnois. MMA was interested in purchasing the CSX trackage as far south as Massena possibly, however did not happen for reasons unknown to me. As you state Mr Norman, this would be an end-around of PAR for maritime traffic destined for CSX. My question is could Fortress revisit this idea MMA had and possibly persuade the Kahnawake Indians and CP to open a new route for interchange directly to CSX. Its possible it would never happen as the Indian reservation would not allow the railroad to be rebuilt on soverign land, and CP might block any such a notion as its traffic they are losing as well. CSX may not be interested either as it would require more crews in Quebec as opposed to a more readily available crew pool on the Boston Line. Just an old topic revisited for discussion with a new owner.

Pardon me if I'm missing something, but doesn't l'Autoroute de l'Acier interrupt this line as well, or am I looking at the wrong route? This is where I see the obstruction - http://goo.gl/maps/SO75A" onclick="window.open(this.href);return false;.

[Gilbert B Norman]

If the underlying doctrine that has governed the consolidation of some 114 Class I's (that number within my memory) into seven is to be sustained with regards to disposition of MMA, then I would think that the last party to acquire MMA would be Canadian National, or its US Sub, Grand Trunk.

That doctrine appears to be that if any shipper who had previously enjoyed access to two different railroads would continue to do so after the combination. You can be sure that the surviving 'Big Four', only granted access to industries 'under duress' or otherwise 'if you want your deal the other guy will get to horn in on what otherwise would be your traffic'.

Somehow, I doubt if Irving Oil would be the happiest of campers if movement of their crude traffic were controlled by one road. They could well start looking for alternatives resulting in a short haul or even complete diversion (pipeline to the Gulf, thence ocean to St John) from railroads. This would make a case for having the MMA, if it is to rejoin the industry operating safe trains with proper insurance, remain an independent. If the Adirondack Junction gateway were to be reopened, then as I earlier noted, there would be competitive routings such as NYC-Adirondack-CP-Megantic-CP-M and PRR-?-ERIE-Binghamton-D&H-Albany area-B&M-MEC (predecessors used for clarity).

Oh and finally rebuilding tracks through an indian reservation (First Nation, or whatever they are called up there). 'Wampum talks, do-do walks'.

[fogg1703]

Pardon me if I'm missing something, but doesn't l'Autoroute de l'Acier interrupt this line as well, or am I looking at the wrong route? This is where I see the obstruction - http://goo.gl/maps/SO75A" onclick="window.open(this.href);return false;.

No that is an abandoned CN line out of Delson. I'm not very familiar with that area so I don't know much about former lines, abandonments and such.
Here is Adirondack Jct.http://binged.it/1k1o6U9" onclick="window.open(this.href);return false; . Follow the line west to the Chateaquay River Bridge where it looks like the rails are still intact.

[Ridgefielder]

What years did you do your financials for or were you forecasting?

I got an EBITDA of $200M using the operating revenues figure on page 5. The EBIT was $43M. My NWC came out to $13M. Current ratio was 1.41 and the capital structure was 20% equity, 80% debt.

I annualized trailing-9-mos numbers from the September 2013 quarterly. Real back-of-the-envelope stuff, admittedly.

What is interesting is during this year, they were seperating the railroad into a seperate subsidiary (no clue what it was in before) so they were playing around with debt a bit. This made the fin statements look a bit wonky for this year, primarily because their interest was very much off. However, they didn't indicate where they assumed debt from... and my assumption was that it came from Fortress so it really was just moving money around between assets in the umbrella. (One wonders about tax shields in this instance)

If I recall correctly, Florida East Coast Industries included the railroad, a real-estate-development company, and some other stuff-- basically everything old Henry Flagler put together in the 1890's. Putting the RR into a separate sub seems a logical step for a new acquirer.

It would be nice to have the last 25 years of statements lined up together to see how things changed after Fortress ownership, but I don't think the statements from these years (2010, 2009) are indicative of how the railroad up here will operate. You could definitely compare this to other railroads and I did... just common size the balance sheet.

Agreed on both points.

[mtuandrew]

Pardon me if I'm missing something, but doesn't l'Autoroute de l'Acier interrupt this line as well, or am I looking at the wrong route? This is where I see the obstruction - http://goo.gl/maps/SO75A" onclick="window.open(this.href);return false;.

No that is an abandoned CN line out of Delson. I'm not very familiar with that area so I don't know much about former lines, abandonments and such.
Here is Adirondack Jct.http://binged.it/1k1o6U9" onclick="window.open(this.href);return false; . Follow the line west to the Chateaquay River Bridge where it looks like the rails are still intact.

Ah, that makes more sense. Thanks.

[CPF363]

No that is an abandoned CN line out of Delson..

Frustrating the CN line from Delson to Huntingdon line was abandoned. The western end of the line ties directly in with CSX's Montreal Subdivision at Huntingdon, Québec and avoiding Kahnawake. Does anyone know when this line was abandoned?

[Ken V]

Does anyone know when this line was abandoned?

The CN Massena Sub between Huntingdon and Delson was abandoned in segments, from west to east, between 1993 and 2007.

[mtuandrew]

Frustrating the CN line from Delson to Huntingdon line was abandoned. The western end of the line ties directly in with CSX's Montreal Subdivision at Huntingdon, Québec and avoiding Kahnawake.

It also avoids two bridges over the St. Lawrence. I suppose that once the FEC gets done building All Aboard Florida, they could get to work on this line... and then they could buy the CSX to Syracuse, and then buy the Susquehanna to New York, and then, and then, and then...

Or, they could just build good relationships with CP and CN.

[Ridgefielder]

They could potentially revive "Canadian American," last used in the Iron Road days. Iron Road used the word Railroad in the name; Fortress could perhaps use Railway or Rail System if they wanted or needed to make it slightly different.

There are other possibilities, such as Montreal & Aroostook, Quebec & New England, etc. I'm sure they'll come up with something and hopefully it'll have a nice ring to it.

Canadian American is what I was thinking of when I said Canadian Atlantic. Was trying to think of other names that would fit the CDAC marks. Good brain exercise...

I immediately dropped from any of my imaginary names "Aroostook" since Fortress owns, at best, about 15 miles of track in the county... They could drop the "Maine" and become Montreal and Atlantic...

Just thoughts.

Maybe they'll put the name out for a vote here on the forum.

My gut is that the name will be as different as possible from Montreal, Maine & Atlantic given the negative connotations likely to surround that title for a long time to come. Bangor & Quebec has a nice ring to it...

[CN9634]

Everything is still very tight lipped... but everyone from the State and the shipping side seems to be very happy about Fortress thus far. They flew in reps to meet at Searsport before the auction to see about some interesting ideas each side had. Stay tuned.

[MEC407]

From The Portland Press Herald:

Why would Fortress Investment Group, a global firm with $58 billion in assets, want a small, bankrupt railroad in a remote region where traditional rail customers have been in decline for years?

The answer, say transportation experts, is Fortress probably sees potential in the railroad’s unique geographic position on the North American continent.
. . .
The railroad may travel though some of the most remote areas in the United States, the experts say, but its roughly 500 miles of tracks provide the shortest route between two large Canadian cities, Montreal and Saint John, New Brunswick.
. . .
Fortress has chosen a veteran railroad operator, John Giles, to lead the new railroad initiative in Maine. Giles’ 40-years-plus career includes executive jobs with CSX Corp, Great Lakes Transportation and RailAmerica, one of North America’s largest operators of short-line and regional freight railroads.

Read the rest of the article at: http://www.pressherald.com/news/What_do ... way__.html" onclick="window.open(this.href);return false;

[gokeefe]

I find it interesting that the analysis of the purchase seems to be saying that the owner's background changes the fate of the railroad. Most of the discussion here has centered around the idea that the railroad's history has dominated the fate of the owner.

This would appear to imply that the requirement for success on this line is a major operation with substantial capital and transcontinental ambitions. Anything short of that, i.e. routine interest in operating a "regional" shortline isn't enough to make these lines successful.

[Ridgefielder]

This would appear to imply that the requirement for success on this line is a major operation with substantial capital and transcontinental ambitions. Anything short of that, i.e. routine interest in operating a "regional" shortline isn't enough to make these lines successful.

Seems to me that's been true of the Moosehead since Day 1 of the International Railway of Maine back in 1889. Even in the "golden age" of rail there wasn't much online business.

[Cowford]

I'd be interested to hear thoughts on traffic potential. All this "critical link" stuff sounds great, but there is little detail behind it which makes this skeptic skeptical. I asked in another thread about CN volume out of Saint John. I was told by a colleague that, outside of oil and potash unit trains, it's one train each way per day. And the line west of Moncton ain't that much busier either. Assuming that there will never be a near 100% market share shift from CN to New RR (especially when PAR can also participate), upside from the Maritimes is limited. So that leaves Searsport. The only POSSIBLE traffic of consequence that comes to mind is crude export. As Searsport doesn't want anything but muffin shops and antique stores, that'll be as welcome as ants to a picnic. So what else do proponents have up their sleeves for potential?

[CN9634]

I'd be interested to hear thoughts on traffic potential. All this "critical link" stuff sounds great, but there is little detail behind it which makes this skeptic skeptical. I asked in another thread about CN volume out of Saint John. I was told by a colleague that, outside of oil and potash unit trains, it's one train each way per day. And the line west of Moncton ain't that much busier either. Assuming that there will never be a near 100% market share shift from CN to New RR (especially when PAR can also participate), upside from the Maritimes is limited. So that leaves Searsport. The only POSSIBLE traffic of consequence that comes to mind is crude export. As Searsport doesn't want anything but muffin shops and antique stores, that'll be as welcome as ants to a picnic. So what else do proponents have up their sleeves for potential?

Well, you also have to consider that CN is running 100 - 140 car DPU freights. 305, 308, 120, 121 are pretty big jobs. 406E/W are usually smaller, more around the 60 - 100 range, but they also can have DPU occasionally. At any given time between QC and Moncton, you may have one or two of the previously mentioned jobs. In terms of a 70 car freight railroad, you would be looking at anything from 8 - 10 trains a day on the line above Maine.

Also of interest, they are running crude on CN but only in big cuts -- not in dedicated service. Sometimes, this forces a much larger 406 that has to either run DPU or in two sections. A lot of traffic has shifted away from CN to Pan Am but also new traffic has moved via the Pan Am gateway. Wallboard and lumber is a great example of this. Remember Irving controls about 50,000 carloads a year and those are distributed primarily between CN and PAR. There is a large margin for Fortress if they can work with their Class I connections (CP primarily, CSX indirectly, CN for their local stuff in QC). Also remember that CDAC ran 3 pairs of trains daily back in their hayday and a lot of that traffic still exists today, just shifted away. I think that with Irving controlling and growing the MNR, as well as Saint John, you have all the ingredients to make a solid daily manifest. Also, GAC and Searsport are expecting to increase loads (Searsport is putting in a rail hopper unloading convey in the next two years), as well as perhaps transload in Bangor.

Greenville is looking to pull in chips (Not a huge revenue, but none the less, another customer on the Moosehead) for a biomass electricity plant they are working on. A single line haul from say LaGrange or even single interchange with MNR could be key to that. Cheaper domestic LPG also opens up inroads for traffic. We will wait and see how this plays out...