CSX Acquisition of Pan Am Railways

What do you mean what they're doing?

This thread has certainly taken on legs of its own with some wild (underscore on that) speculation. Lets all take a step back and breath some air.

The Pan Am CRISI grant details just were published in ANR&P (perhaps my criticism was heard, it was a very thorough and well constructed piece) so if you can go check it out. Abridged version is they are looking for $21M grant match to their own $21M (their contribute is ~$8M in cash and the rest 'labor and stuff') to rebuild from Waterville to Keag, dubbed the 'Pine Tree Corridor'. Project completion date is 2023.

The project basically installs 37 mile of relay 115# CWR, 40 new turnouts, crossings, bridges, ties, ect, gets them the whole 110 miles from Waterville to Keag up to 25MPH and 286K.

Maybe that'll help Mellon get his taller price?

Another ploy for someone elses money when they'll let it go to hell within 5 years. Sell the damn thing and be done with it!

PAR is more valuable with an upgrade that costs 50% off.

So they're not doing Waterville-Royal Jct?

From what I see based on Googling "CRISI Grant Awards", no such funds were granted for this Waterville to Mattawamkeag rehab project. The only grant for a Maine project in FY2019 was at Wells

Constructs a new intercity passenger rail platform at the Wells Transportation Center and a
pedestrian bridge to access the new platform, and extends an existing two-mile Pan Am Railway
siding to become a six-mile siding adjacent to the new platform in Wells, Maine.

So I'm guessing that Pan Am submitted Waterville - Mattawamkeag project prior to the FY2020 grant application deadline "no later than 5:00 p.m. ET, June 19, 2020" and awards have not yet been announced (Maybe we'll see an award announcement prior to election day?). There apparently is $311.8 million available to be awarded by the FRA under the FY2020 CRISI program.

Net: the Pan Am rehab project does not seem to be a done deal yet in terms of Federal funding. If true, I wonder how this affects the thinking and bids made by prospective buyers?

BTW, shouldn't our poll for who we guess to be the next owner of Pan Am allow for multiple buyers?

johnpbarlow wrote:BTW, shouldn't our poll for who we guess to be the next owner of Pan Am allow for multiple buyers?

That would be interesting indeed. Still curious if the mileage to Saint John via SLR is shorter than via CN main line ...

Completely agreed with the idea that this is wild speculation but at this point there is little else about CN's interest in this sale that makes any sense.

To date no one seems to have offered a rational explanation that I can recall beyond, "they're buying stuff" now because of some unexplained interest in disjointed expansion.

For reasons that are not well understood at all New England, and Maine in particular has suddenly become a compelling investment to no less than 3 Class I railroads. For this part of the country the only one left out is CSX.

Pan Am continuing as a Class II railroad was the long term rational case that we all understand. CP, CN and perhaps NS ("here comes Topper!") suddenly seem interested for reasons that no one really seems to have explained yet. I would submit that our speculation is only as wild as the circumstances.


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I'm sorry but an SLR-ST-NBSR routing to get to Saint John with CN makes no sense any way you think about it. Or for that matter HALIFAX where CN focus their energy and soon to be Quebec City. CN may simply be interested as they own independent operations as revenue generators. See TransX, H&R, B&LE ect, CN is just focused on hitting its revenue growth targets and Pan Am may be an interesting target in their mind. So the reason of "they're buying stuff" is simply going to have to do (because that's likely the exact reason they are interested).

Relative to interest in Maine RRs and reasons.... when things are for sale groups tend to be interested and take a look. Also not the first time Class Is have looked at Maine RRs for sale (CN and CP looked at MMA circa 2009/10), but the first time one bought one was CMQ. Timing wise It just so happens that CMQ was for sale last year as well as it fit into CP's strategy and Pan Am is putting fourth an actual effort to sell this year so we'll see what comes of it.

Would PAR's successor be able to take advantage of grants / PPP's awarded to PAR before the sale is finalized?

Well, if the sale wasn't finalized, no successor would be in the picture yet. It would still be PAR. It would be their choice if they wanted to accept the grant, and put up the matching funds or not.

The STB regulatory period will likely be 9-12 months if I had to guess offhand... so its not like they sell and are immediately taken over. Also this grant has been worked on since before the 'sale' was really a thing. Probably would go into a trustee operation or something depends on how quickly Mellon wants his money but in any case its business as usual and life goes on.

CN9634 wrote:CN may simply be interested as they own independent operations as revenue generators. See TransX, H&R, B&LE ect, CN is just focused on hitting its revenue growth targets and Pan Am may be an interesting target in their mind. So the reason of "they're buying stuff" is simply going to have to do (because that's likely the exact reason they are interested).

I think this is a very reasonable proposition. I also think it's surprising that Pan Am would meet their criteria for acquisition. This would seem to imply some opportunity for growth as opposed to a managed decline.

Even if the working assumption is that the branch lines would be spun off there's still a question of pricing based on what CN (or any other Class I) would ultimately buy vs. what they would ultimately operate.

If revenue generation is that intended outcome then a financial motivation is at stake. If that's true then there must be more business opportunities than we understand.

Otherwise they are deliberately investing poorly (a scenario which I assume is false), or there aren't any other good acquisition choices out there and they *must* spend money (another false scenario), or they have non-financial motivations (seems highly unlikely).

So we are either back to "square one" or there are business growth opportunities we don't understand. It might also be possible that Pan Am is much more profitable than any of us realize but that doesn't seem likely (at least superficially).

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johnpbarlow wrote: ↑Wed Aug 26, 2020 5:40 am BTW, shouldn't our poll for who we guess to be the next owner of Pan Am allow for multiple buyers?

Or, the fact it may not sell at all.

It may well be the case that there is more growth potential than what is immediately evident. Rumford Jay and Hinckley could easily be doing a lot more inbound and outbound by rail if they had better rates and service. With willpower and investment the right owner could easily double volumes of existing traffic on the MEC.

Also, (and this is purely anecdotal) on a northbound drive from Portsmouth to Bangor on 95 just yesterday, I saw dozens of JB Hunt, Schneider and Umax containers heading in and out of Maine.

CN9634 wrote: ↑Tue Aug 25, 2020 9:05 pm This thread has certainly taken on legs of its own with some wild (underscore on that) speculation. Lets all take a step back and breath some air.

Mr. 9634, I appreciate participating at this topic because it appears to be populated by members "who do, or have done this stuff for a living". The loonie railfans with "Gee. can't they bring back the 'State of Maine', 'Bar Harbor', and the 'Atlantic Limited'" have kept those thoughts to themselves.

Cosakita18 wrote: ↑Wed Aug 26, 2020 12:15 pmAlso, (and this is purely anecdotal) on a northbound drive from Portsmouth to Bangor on 95 just yesterday, I saw dozens of JB Hunt, Schneider and Umax containers heading in and out of Maine.

On the rails, or on the highway?