Embattled Apache Railway gets breathing room

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DivenApacheRailway2
The Apache Rail turn to Holbrook departs the BNSF Railway interchange with loads of animal feed and recycled paper to be made into newsprint at the mill in Snowflake.
The Apache Railway in Arizona has a reprieve from a U.S. bankruptcy court judge to find new owners.
William P. Diven
A federal bankruptcy judge has given the Apache Railway three months of breathing room while local interests try to arrange the sale of the Arizona shortline.

The court order signed Tuesday sets a Nov. 30 deadline for the sale of the 38-mile line known to railfans for its all-Alco roster of Century 420 and C424 locomotives built in the 1960s. The Apache interchanges with the BNSF Railway at Holbrook on the Southern Transcon in northeastern Arizona.

The line has limped along since the paper mill in Snowflake closed in 2012 and was razed by an investor group that set a scrap value on the railroad to be at least $11 million salvage value. The new agreement sets a price of $7.2 million for the stock in Apache, which the Little Colorado Water Conservation District hopes to purchase, the White Mountain Independent in Show Low, Ariz., reported.

As previously reported in Trains NewsWire, Snowflake-area business and civic leaders convinced the investor group to delay scrapping while they sought a new owner. The investors then shifted ownership of the Apache into the Snowflake Community Foundation, where it has been in bankruptcy since May owing nearly $8 million after a previous refinancing attempt fell through.

If the court allows the investors to foreclose on the railroad, they would be free to pull up and sell the rail and recycle valuable ballast.

This last-ditch effort hinges on U.S. Department of Agriculture financing for the Little Colorado Water Conservancy District to buy the Apache. Earlier this week Sen. John McCain, R-Ariz., wrote to Secretary of Agriculture Tom Vilsack asking for an update on the districts application.

"In my view, the Apache Railroad’s infrastructure remains necessary for retaining business in an already fragile economy and attracting new industry to Navajo County," McCain wrote.

McCain cites the closure of the paper mill at Snowflake as a blow to the area but adds timber thinning in the White Mountains is underway with a rail-based expansion planned. Other prospective businesses are looking at the area, he added.

The Apache currently has about 20 employees, according to the senator.

NEWSWIRETrains News Wire

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