What's next for MMA?

gokeefe wrote:I am concerned about the idea of the Moosehead Sub being scrapped. This would be bad for that part of Maine and would permanently close off certain development options. At least in the Greenville area the rail of a good weight and condition (115 lb.).

The deal's just a prelude to other deals. If MEDOT and VTTrans are ready to make bids on the rest of the MMA-owned trackage in their states, the only thing they're waiting for is for the investment firm to take control of the company and the bankruptcy to be settled. Having a stable controlling interest is one way to ensure a better sale price and leverage when they do start partitioning assets. And it can potentially drive up the price for the freight rights should Irving, VRS, and possibly G&W still be bidders for specific pieces of territory. Outright line ownership might not be the most attractive prospect given track conditions and lower prospects of state-sponsored investment in the state-of-repair. Ownership doesn't necessarily boost the value of those companies if it's not a primary mainline asset. As long as the freight rights that Fortress retains control of or dishes off are exclusive, it doesn't matter so much the ROW itself is state-owned or privately-owned. And potentially better if state-owned.

I'd still expect both states to be very aggressive about pursuing ownership. Opportunities like this to lock up that many route miles under public control simply don't come along every day.

No doubt the idea of scrapping the Moosehead does not sit well with me either, reality is without maritime traffic (crude) the line is not profitable for anything other than the real estate and scrap. My point being the Fortress bid is a good bargain basement price for a system that could potentially have 350 route miles of unprofitable track due to its main traffic source being routed via ship. Therefore without crude to keep it open, a bidder would likely see the line as scrap and shop it to potential land users of is ROW.

F-line to Dudley via Park wrote:I'd still expect both states to be very aggressive about pursuing ownership. Opportunities like this to lock up that many route miles under public control simply don't come along every day.

I would agree that the VT portion would be a great acquisition for VTTrans. However the remaining Maine portions (minus the Moosehead), Millinocket to Searsport I would have a difficult time swallowing as the relatively small amount of online shippers is a lot less than say the scenario was with the Aroostook lines (a dozen shippers of critical importance to one are). The benefactor of Searsport currently is Irving and down the road whatever becomes of the Millinocket mills and their conversion to torrified wood production. I would sincerely hope that some long hard research occurs before the state subsidizes a rail line that could be construed as serving one of two big shippers which could maintain the rail line themselves or contract that out to a shortline.

F-line to Dudley via Park wrote:I'd still expect both states to be very aggressive about pursuing ownership. Opportunities like this to lock up that many route miles under public control simply don't come along every day.

I agree with that and if necessary I think the Surface Transportation Board would be very supportive.

And the State of Maine gains what out of ownership? No commuter or long distance passenger traffic to interfere with all the freight activity on the MMA lines. There is no threat of abandonment like the Aroostook lines. Why not let private industry make a go of it. One would hope that a bankrupcy judge would select a bidder who wishes to "run" the railroad rather than scrap it.

fogg1703 wrote:There is no threat of abandonment like the Aroostook lines.

Others here seem to think otherwise.

fogg1703 wrote:And the State of Maine gains what out of ownership? No commuter or long distance passenger traffic to interfere with all the freight activity on the MMA lines. There is no threat of abandonment like the Aroostook lines. Why not let private industry make a go of it. One would hope that a bankrupcy judge would select a bidder who wishes to "run" the railroad rather than scrap it.

At the end of the day, if no on bids Fortress will get it and run it.

fogg1703 wrote:And the State of Maine gains what out of ownership? No commuter or long distance passenger traffic to interfere with all the freight activity on the MMA lines. There is no threat of abandonment like the Aroostook lines. Why not let private industry make a go of it. One would hope that a bankrupcy judge would select a bidder who wishes to "run" the railroad rather than scrap it.

That's what the states gain by owning it. No operator can scrap the line in the face of public interest. We're not talking MEDOT setting up its own railroad. Nor are we talking them pursuing unwise rehabilitation investments here like their obsession with the Mountain Div. It's about locking up transportation assets in the public interest at century-long level. Where usage TODAY is no predictor for what usage it will have 50 years from now...because 50 years from now is beyond the scope of prediction. The New England states have been very aggressive picking up every bit of ROW they can get their hands on--including useless little abandoned stubs--to build a portfolio. Sometimes it's just to landbank for building-a-portfolio's sake, or to have some linear strip of land to string utilities across. They do it because these buy-low investments appreciate in value and even the most worthless little scraps will manage to amortize themselves by the 22nd century whether they're used again for transportation or not.

Chances are a still quite active international-crossing, cross-state, multiple-interchange mainline that was also carrying passengers as late as 19 years ago tomorrow (the anniversary of the Atlantic's last run across the Moosehead)...has a pretty decent chance of paying back by 2100 the public investment of buying it in a one-time bankruptcy fire sale. So does the Mountain Div. A century is a very long time. And "running a railroad" has nothing to do with owning a ROW. Public ownership of a ROW has as low an overhead as you want it to be, stretched over length of time well beyond our lifespans. Whereas a private entity paying taxes on an unused ROW has profit motivations to consider, and if utilization truly is that low or short/mid-term hopeless...it is in their profit-seeking interests to consider scrapping the infrastructure and letting it get built over. No promises by a bankruptcy bidder prevent that profit motive from happening at some point during the century when the biggest, bankruptcy-reshaped Class I's of all lost thousands of route miles to outright, non-landbanked abandonment and encroachment that way. If it's not so big and so critical a trunkline that it's safe in private ownership hands for the rest of the century, why wouldn't a state pursue with gusto a buy-low opportunity to put a mainline (especially an active one) in the public trust?

It's a mistake to conflate public ownership with capital investment in the rail infrastructure or notions of operating a service. Those are in-the-moment decisions that need ample justification. I would hope MEDOT's not going to distract itself with more Mountain Div.-esque foamer fantasies here that cost them real steel and labor for no traffic and no coherent plan for traffic. But that's a wholly voluntary short-term decision on their part, and very different from banking an asset to the state transportation ownership portfolio. If your argument is somehow that owning a ROW and "running a railroad" are somehow one and the same, then you have to make the case of how the purchase today is going to amortize poorly between today and the year 2100. If they don't make a bid agreement that somehow bounds and gags them to spend millions of dollars on stick-and-ties as a condition of the sale, I don't see how the asset itself and the ops are joined at the hip. The ROW purchase is ops-neutral, and only gives the state leverage in who and what operate on it the next time there's a decision to be made. That's not a bad thing, nor was it a bad thing on the Mountain. If that's not the case with the VTTrans portion and Millinocket-Searsport, where a decision also needs to be made today on who/what operate, how is the Mooshead different? It's just a different who/what/if/not decision; the motivation for putting the line in the public trust is exactly the same.

The proposed private east-west highway was discussed earlier this year. It may
have been in this thread or elsewhere. The project was in the news, both before
and after the Megantic disaster.

Any shutdown, even short of abandonment, of the Moosehead Sub in the shakeout
of the MM&A will have supprters of the east-west highway making noise in Augusta
elsewhere, again.

Dick H wrote:The proposed private east-west highway was discussed earlier this year. It may
have been in this thread or elsewhere. The project was in the news, both before
and after the Megantic disaster.

Any shutdown, even short of abandonment, of the Moosehead Sub in the shakeout
of the MM&A will have supprters of the east-west highway making noise in Augusta
elsewhere, again.

That thought crossed my mind as well. But as usual it is quickly laid to rest but the fundamental hostility of that entire part of the state to such a project. They really and truly do not want a highway out in that area.

F-line to Dudley via Park wrote:Nor are we talking them pursuing unwise rehabilitation investments here like their obsession with the Mountain Div.

I think anyone who pays attention to politics in Maine would be leary of this assumption.

F-line to Dudley via Park wrote:It's a mistake to conflate public ownership with capital investment in the rail infrastructure or notions of operating a service.

I would like to hear an example in the State of Maine of a nonrailbanked line that has not cost the State some sort of rehab costs.

I think Maine has been a little further behind in obtaining ROW than most New England states for multiple reasons including population, economics, and desire to build a "portfolio." That being said, they were thrust into a position with the Aroostook lines and smartly took advantage and have selected an operator that has proven it is a viable venture as well as a good partner to the State.

Without straying too far off topic here, I stand behind my opinion that without the maritime traffic the Moosehead is unfortunately moribund and has had its fate sealed. IF the State was so inclined to obtain the ROW to stave off scrap then that should be up to the voters. If they purchase it for the sake of landbanking and keeping the ROW intact for future development, I would agree that is a worthy venture. However with the remaining Millinocket-Searsport portion, this could still be a lucrative line linking industries to a deep water port. Any bidder who desires this line, one would hope can see the potential and bid accordingly. And in my mind, if someone wants to profit off of it, let them due their due diligence and run the line to their liking and then, if the State gets wind of a scrap proposal down the road, step and purchase the line for a negotiated price with the intent of keeping the ROW intact for future development/use. I find it hard to beleive that with State ownership of the Millinocket-Searsport line, a new operator would not seek State funding and if denied, have a reason to blame someone else for its demise.

fogg1703 wrote:I would like to hear an example in the State of Maine of a nonrailbanked line that has not cost the State some sort of rehab costs.

The Calais Branch from Brewer to Ellsworth.

Regardless, I am hopeful that operations across the Moosehead Sub will in fact return. And, frankly, yes on some level I think that means we are going to see crude oil transit again, but likely some kind of "restriction" will be made to ensure that the tank cars being used are only those that comply with the new standards that will be adopted.

Well I think you guys have analyzed this to death... How about we wait until Jan 21st to see what happens?

fogg1703 wrote:

F-line to Dudley via Park wrote:Nor are we talking them pursuing unwise rehabilitation investments here like their obsession with the Mountain Div.

I think anyone who pays attention to politics in Maine would be leary of this assumption.

F-line to Dudley via Park wrote:It's a mistake to conflate public ownership with capital investment in the rail infrastructure or notions of operating a service.

I would like to hear an example in the State of Maine of a nonrailbanked line that has not cost the State some sort of rehab costs.

I think Maine has been a little further behind in obtaining ROW than most New England states for multiple reasons including population, economics, and desire to build a "portfolio." That being said, they were thrust into a position with the Aroostook lines and smartly took advantage and have selected an operator that has proven it is a viable venture as well as a good partner to the State.

Without straying too far off topic here, I stand behind my opinion that without the maritime traffic the Moosehead is unfortunately moribund and has had its fate sealed. IF the State was so inclined to obtain the ROW to stave off scrap then that should be up to the voters. If they purchase it for the sake of landbanking and keeping the ROW intact for future development, I would agree that is a worthy venture. However with the remaining Millinocket-Searsport portion, this could still be a lucrative line linking industries to a deep water port. Any bidder who desires this line, one would hope can see the potential and bid accordingly. And in my mind, if someone wants to profit off of it, let them due their due diligence and run the line to their liking and then, if the State gets wind of a scrap proposal down the road, step and purchase the line for a negotiated price with the intent of keeping the ROW intact for future development/use. I find it hard to beleive that with State ownership of the Millinocket-Searsport line, a new operator would not seek State funding and if denied, have a reason to blame someone else for its demise.

Well, my point is lost on you if you're making assumptions that ownership = "running a railroad". Since every New England state has been equally aggressive in purchasing operating lines under public control, can you please offer up some examples from elsewhere as to why those strings-attached go hand in hand as a rule? They don't. It's wholly voluntary. And if you look at recent history, the wholly privately-owned ROW's--which are a minority of the remaining New England track mileage--have been recipients of far more grant money. Mainly because those are the biggest of the big boys with the most inherent leverage. There is no implicit obligation to offer welfare to an operator just because the land is publicly owned. If anything, it's a 2-way street...if the operator doesn't live up to their end of the bargain they don't get the public investment (see CDOT pulling all of Housatonic's grant applications for failing to meet the obligations of past rewards on its state-owned trackage).


Maine is not special in its overall approach to public ownership of its transportation infrastructure. Nobody is disputing that they've chased some unwise reactivation proposals, but you're arguing an entire "one-of-these-is-not-like-the-other" status for Maine vs. its neighbors. I'm not seeing the evidence of their pursuit of public ownership being worse than anyone else's.

From The Portland Press Herald:

The Portland Press Herald wrote:Fate of bankrupt Maine railway hinges on buyer

The sole bidder so far may see more value in ending service in Maine and selling the assets in pieces, experts say.
. . .
As stalking horse bidder, the firm could earn money from fees even if it does not end up buying the Montreal, Maine & Atlantic. To such a buyer, industry observers said, the Hermon-based short-line rail company may be more valuable if its rail network is broken up and sold off in pieces than if it is kept intact and operated in its current configuration.
. . .
Its strategy has been to buy an asset, add value and then “flip it” to another investor or take the company public, Marson said. “They’ll sell it and divest of it in bits and pieces,” he said.
. . .
Marson said the line between Brownville Junction and Lac-Megantic, known as the Moosehead Subdivision, is unlikely to survive under new ownership because it’s too expensive to maintain for just one customer. He also questioned whether any buyer would keep the railroad’s Derby Shops, a train repair facility in Milo that was once the second-largest in New England.

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

Interesting facts from the article, buried in the end paragraphs:

Portland Press Herald wrote: [Bankruptcy Trustee Robert] Keach said he believes that the railroad may realize its greatest value if it is sold intact, and that the Moosehead Subdivision is a critical asset because it connects Maine customers with Montreal.

Bankrupt railroads have unique status under federal law, because railroads are monopolies and are considered critical to commerce. Keach said trustees must consider the “public interest” in maintaining a railroad as an ongoing business.

Although Fortress Investment Group’s offer sets a minimum price, Keach said, he is allowed to accept a lower bid if he believes that the prospective buyer is more capable of running a successful railroad.

So, the Trustee at any event is in no hurry to see the line go to the scrapper: and signaled publicly to Fortress that he has the power to reject their bid if he thinks they're going to pursue immediate abandonment.