Latest CN buying rumor - is EJ&E next?

[neroden]

The deal as originallly conceived is dead.

CN failed to anticipate the number of groups which would have to be appeased, and put a deadline on the Transtar contract of Dec 31, 2008. They aren't going to make that deadline, because environmental review won't be ready until next year. Transtar has announced that it will not extend the deadline. (I'm guessing they're planning to get a better offer.)

This is just stupidity on Hunter Harrison's part. He should have known that the deal might take significantly longer to close -- if they'd insisted on a longer deadline originally, they might have been able to get through all the paperwork.

[byte]

I'm not sure who all would be interested in buying the J. Geographically speaking, if all the railroads in Chicago had the opportunity to purchase the route, CN is the one which gets the most benefit out of it. Maybe Metra as well, but only if Phil Pagano manages to find a magic pot of subsidies under the rainbow.

What I think will happen (and this is just one guy's opinion) is that TranStar will "re-negotiate" a new deal with CN, and considerably up their profit margin on the sale in the process.

All in all, it's a real shame the NIMBYs got so far with this one, though it's not likely a question of if big red CN engines will be growling through Barrington, but a matter of when.

[Gilbert B Norman]

http://www.railwayage.com/breaking_news.shtml

Brief passage:

• House bill H.R. 6707, requiring the Surface Transportation Board to consider the effect on safety, the environment, and intercity passenger rail when weighing proposed railroad mergers, failed to pass the House Saturday, falling short of the two-thirds "supermajority" required with a vote of 243-175.
  
  The bill was introduced in reaction to Canadian National's plans to acquire the Elgin, Joliet & Eastern Railway, which critics contend would pose numerous safety and health problems

You know, volks, I really have "achie breakie heart" for the folk who bought their McMansions up in Barrington on the strength of "oh that is just a little rickety freight line in your backyard" will be sobbing. Now that its "captive' USSteel traffic is greatly diminished, the "J" was a natural for the CN to seek affording them a one carrier routing arouund Chicago for their otherwise WC-Chi-IC traffic..

If I read this correctly, it appears that the NIMBY's will not have an audience with Surf Board, and I guess a J-CN merger will now move forth. Good news for those of us who have been observing industry affairs "for a long time"; even better news for us who were within the industry during its "darkest ages" of the '70's. Speaking for myself, even though I left the industry for a "third career" as a CPA in private practice (retired five years ago; first career, USAF) at end of 1981 and I have not actively railfanned in some twenty five years, I still follow industry affairs. It is indeed gratifying to see the railroad industry enter its "Second Golden Age".

Finally, I would not rule out watching CN making a play for the KCS; in view of their existing Mexican railway interests, there would be your true North South 'Pan American Railroad'.

[Tadman]

GBN mentions USS online traffic - how does EJ&E traffic today compare not only with projected CN traffic in a few years, but also compared to EJ&E traffic in times past when Chicago was a busier manufacturing center, and there were many more USS properties in town, such as South Works and Joliet Works, amongst others? Could the case be made that today's low traffic levels are just a lull between busier times when Joliet and South Works were open as well as the existence of >5 class I's using EJ&E to interchange amongst themselves?

[Gilbert B Norman]

Today's Wall Street Journal reports that if SurfBoard has not ruled on CN acquisition of the "J" by Dec 31, USSteel says "deal's off":

http://online.wsj.com/article/SB122990092492124959.html

Brief passage:

• Now all sides are waiting for a decision from the federal Surface Transportation Board, three presidential appointees who must approve all major railroad mergers and acquisitions, based on a variety of factors including environmental and competitive impacts. Citing the public controversy, U.S. Steel already has said if the deal -- signed in late 2007 -- isn't finalized by Dec. 31, it won't extend the agreement into 2009. A spokesman for the transportation board declined to comment.

[CN9634]

Another One Bits the Dust

http://www.stb.dot.gov/__85256593004F57 ... enDocument

The EJ&E is Official CN property.

[GWoodle]

This has been reported in the Chicago Tribune too.

CN gets a nice christmas present.

I understand the 2 crossings to be with US 30 & US 34. Perhaps CN can apply for some stimulus funds to move this project along?

[sschelle]

Not so fast!

One little quirk remains.

U.S. Steel, the owner of the EJ&E had required that the deal be CLOSED by 12/31/2008,once it saw the stink the locals raised.

CN petitioned the STB for fast action, was denied and recieved the approval only today (12/24/2008).

STB decisions need to be published on the Federal Register for 30 days before becoming final, thus a closing cannot occur until 1/24/2009.

CN will need to get an extension from U.S. Steel, whom I would think will now be under tremendous public (and congressional pressure ((Dick Durbin)) to deny the extension.

The sale price however is a nice chunk of change ($300 million).

[atsf sp]

Not another American shortline to fall to a Canadian Class 1. I saw the ICE and DME before they fell. But not the J. Except for a preserved steamer.

[Milwaukee_F40C]

U.S. Steel, the owner of the EJ&E had required that the deal be CLOSED by 12/31/2008,once it saw the stink the locals raised.

CN petitioned the STB for fast action, was denied and recieved the approval only today (12/24/2008).

STB decisions need to be published on the Federal Register for 30 days before becoming final, thus a closing cannot occur until 1/24/2009.

CN will need to get an extension from U.S. Steel, whom I would think will now be under tremendous public (and congressional pressure ((Dick Durbin)) to deny the extension.

I doubt this will mean anything at this point. I have a feeling Transtar came up with the deal deadline partly just for some leverage in getting CN to be more serious about the merger. The approval has been announced and with being so close to closing I doubt the J's people would want to risk setting things back up to possibly another year or even not getting anything at all, especially with the government regime change coming up and the economic slowdown right now. Not like they will be able to increase the price too much at this point either.

Side note, Transtar just recently took down a lot of job postings on their site, not just for the J, but for most of their transportation businesses.

[mrconductor55]

Well I went and got my first and probrably last J Shots yesterday. I rode Metra down to Joliet yesterday and rode my bike over to EJE Joliet yard. SW1200's 322 and 306 were switching the yard.Thats my kind of Power! It was great seeing these two old switchers MU'd together, dragging cuts of 30+ cars around. It would have been cooler if there was only one, as One could handle the work, It would just smoke more. These units didn't break a sweat.

[atsf sp]

STB decisions need to be published on the Federal Register for 30 days before becoming final, thus a closing cannot occur until 1/24/2009.

Anymore word on if this closing will occur since we have three days till the dealine.

[Gilbert B Norman]

According to WBBM 780 during the 5AM hour, the last ditch effort in Federal Court to overturn the STB Decision in favor of the acquisition has been denied:

http://www.suburbanchicagonews.com/nape ... S1.article

Even if the affected parties "vow to fight on', it appears the deed is done.

Addendum:

Associated Press courtesy Kankakee Daily Journal

[GWoodle]

Time to see what news bureau is still working. The deal could be done today???

[Gilbert B Norman]

It appears that there is a "done deal" in place:

Associated Press (courtesy WBBM CBS2 Chicago)

To the 'aggrieved McMansionites" of Naperville and Barrington, "sorry bout that'. We've all taken out hits with our investments nowadays - be assured that to do an end-of-month "price up" of my portfolio today will not be a pleasant task.