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

[KEN PATRICK]

murray- the crude intake max at 74 bbls/car is 400 cars. not talking about output.
cbr is very profitable for railroads at $14bbl. wood products are marginal. i wouldn't base a railroad's profit future on wood products or intermodal. railroads are great at bulk weights and volumes. couldn't ask for a better product than crude in tankers. ken patrick

[murray83]

Yes but the unloading racks at both sites (the actual refinery and it's east side terminals location) can't handle 400 cars a day nor are they going to expand both racks and that I have first hand knowledge in once the pipeline is operational these unit trains will be gone

[oat324]

So start up will be delayed? Lac Megantic paying for this bypass since they don't want the railroad in their town and have they started the environmental study yet?

[BandA]

they let mma use the shoo-fly, why not cmq? If they can't reach agreement, they might rescind the offer & the trustee go with Irving offer without the moosehead which then gets abandoned

[NE87]

So start up will be delayed? Lac Megantic paying for this bypass since they don't want the railroad in their town and have they started the environmental study yet?

Not necessarily, the closing delay may only be procedural. That said it sounds like they may choose to operate a divided system (as is currently done) until Thanksgiving or so when the regular track thru Lac Megantic is restored. Lac Megantic wants Fortess to pay for the bypass.

[NE87]

B&A wrote....

they let mma use the shoo-fly, why not cmq? If they can't reach agreement, they might rescind the offer & the trustee go with Irving offer without the moosehead which then gets abandoned

The Draft Asset Purchase Agreement states:

8.2 (j) Contiguous Line of Railroad. Purchaser shall have determined in its sole judgment that the Assets conveyed
and transferred to it at Closing, and the Governmental Permits, are sufficient to enable Purchaser to operate uninterrupted
through train service over the entirety of the MMA Lines and the MMA Canada Lines from and after the Closing Date.
Purchaser shall have obtained written assurance, in form and substance satisfactory to Purchaser in its sole judgment,
that the temporary rail line in and through the town of Lac Megantic, Quebec (including the segment that is subject to the
lease referred to in Section 5.1(a)(ii)(4) of this Agreement) will, within two (2) years of the Closing Date, become a
permanent railroad line or be replaced by a permanent railroad line (or lines) in and through the town of Lac Megantic to
be constructed on the right-of- way upon which MMA Canada’s rail lines were located prior to July 5, 2013 or via such
alternate route as MMA Canada, Purchaser and any applicable Governmental Authority may agree in writing, in each
case on terms and conditions reasonably satisfactory to Purchaser.

This is the one card that Lac Megantic has to play. They didn't play it with MMA because MMA obviously was broke, couldn't pay for a bypass and were going away. Also, they didn't want to unduely harm Tafisia. Fortress on the other hand is seen as having deep pockets. You are correct, if Megantic overplays their hand abandonment is a real possibilty.

[NE87]

Closing pushed back a month to 4/15 according to ANR&P. Cause is reportedly red tape associated with the CTA and insurance.

[KEN PATRICK]

murray: it's 740 + bbls per car, not 74. sorry for the mispost.
the 'trans-canada' pipeline -a conversion of an existing gas pipeline and about a 1000 miles of new construction will, in my opinion, never be financed. why? because rail has given this fantasy a death blow. hence my enthusiasm for some heads-up rail thinking- both c/cn and pas- to finish of the pipeline with aggressive pricing and operations. it's the greatest opportunity these railroads have had or will have. everything else is marginal. these new owners have a shot at making their investment sound. ken patrick

[CN9634]

The CMQR was granted a waiver by the STB to close the transaction before April 1st, however they are still negotiating a certificate of fitness with CTA and Transport Canada. Closing looks to be around mid-April, however an issue arises with this -- MMA $$ and insurance runs out March 31st, leaving a two week gap of service. Apparently negotiations with Lac Megantic have gone well, and officials from CMQR and CP toured the line from Montreal to Lac Megantic. Mr. Giles says he believes the line in Canada needs about $10 to $20M in investment, really nothing too major, over the next three years. The next few days will be interesting no doubt.

[CPF363]

The next few days will be interesting no doubt.

What options does management for the CMQR have?

[murray83]

So your saying this pipeline will never happen? I guess Irving is building all this infrastructure for nothing

Since your not from here I'll let you know the Irving family is behind this 100% as well as government on all levels as well as private interest

I don't know where you get your facts from

[CN9634]

"American authorities have approved it, but the $15.85 million purchase of the Maine railroad forced into bankruptcy by the disastrous Lac-Megantic derailment last year is delayed, possibly until June, while Canadian authorities review the sale, the railroad’s court-appointed trustee said Tuesday..."

http://bangordailynews.com/2014/03/18/n ... e-railway/" onclick="window.open(this.href);return false;

[CPF363]

"American authorities have approved it, but the $15.85 million purchase of the Maine railroad forced into bankruptcy by the disastrous Lac-Megantic derailment last year is delayed, possibly until June, while Canadian authorities review the sale, the railroad’s court-appointed trustee said Tuesday..."

Will it be possible for Fortress to begin to operate MM&A lines in the U.S. on April 1st while the trustee operates the Canadian lines until June 1st or will they wait for the entire system? Could the new CMQR operate the Canadian lines for trustee until the sale in Canada is finalized?

[CN9634]

They will be operating the whole thing at the same time -- most likely around June 1st

[KEN PATRICK]

murray83. you should google this pipeline adventure. the promoters are looking for $12 billion. never happen. maybe the partial shift from gas to crude to the refineries in montreal. to st john? i doubt the irving 'family' would consider coughing up the billions for something so marginal. as i posted earlier, this is low-hanging fruit for railroads. all they need to do is lock-in some long term contracts. there are enough railcars in the pipeline. ken patrick