CP to acquire Central Maine & Quebec (updated)

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CMQ1006
Central Maine & Quebec’s Job 1 rolls west at Magog, Quebec, with AC44CWs, Nos. 1002 and 1006, and GP38-3 No. 3812 in June 2018.
Frank Jolin
MONTREAL – Canadian Pacific is acquiring the Central Maine & Quebec Railway for $130 million.

The acquisition of the 481-mile short line connecting Quebec with northern New England — much of which is former CP trackage — comes 25 years after the Class I railroad pulled out of the region when it sold its lines east of Montreal. In a press release, President and CEO Keith Creel says the acquisition will help better serve customers and the region.

"This strategic acquisition gives CP a true coast-to-coast network across Canada and an increased presence in the eastern United States," Creel says. "With additional port access, more dots on the map, and our proven precision scheduled railroading operating model we are confident this transaction will bring benefits to all stakeholders moving forward."

The deal with CM&Q’s owner, Fortress Transportation and Infrastructure Investors, is expected to close before the end of the year. Fortress reported the $130 million price in a filing with the Securities and Exchange Commission. Fortress will retain ownership of Katahdin Railcar Services, a tank car cleaning and repair facility near Milo, Maine, and the contract to operate a 12-mile branch line at its Long Ridge Energy Terminal in Monroe County, Ohio.

"We are excited about this transaction as it brings value to our shareholders while ensuring that the CM&Q continues to provide safe and reliable rail transportation options," says Fortress CEO Joe Adams.

The acquisition is the latest development in a long saga for the CP’s lines east of Montreal. In 1995, CP sold its main line from Montreal to Saint John, N.B. The section from Saint John to Brownville Junction, Maine, was sold to J.D. Irving and renamed the New Brunswick Southern and Eastern Maine Railways. The line from Brownville Junction to St. Jean (near Montreal), was sold to Iron Road Railways and merged with the Bangor & Aroostook. Iron Road later acquired CP’s line from Farnham, Que. south into Vermont as well.

In 2002, the Iron Road the railroad to Ed Burkhardt’s Rail World Inc. who renamed it the Montreal Maine & Atlantic. The MM&A struggled through the 2000s, thanks in large part to the decline of Maine’s paper industry. In 2010, MM&A sold a large chunk of the former BAR to the State of Maine that in turn leased it to J.D. Irving.

In July 2013, an MM&A oil train derailed and exploded in the small town of Lac-Mégantic, leveling more than 30 buildings and killing 47 people. The railroad filed for bankruptcy a month later and in 2014 it was sold to Fortress.

Included in the sale to the CP will be the main line from St. Jean to Brownville Jct. and the line from Farnham to Newport, Vt., as well as the former BAR to Millinocket and Searsport, Maine. CM&Q also operates the former Maine Central from Brunswick to Rockland that is owned by the State of Maine.

Central Maine & Quebec is profiled in the August 2019 issue of Trains.

— Updated at 5:50 p.m. CST on Nov. 20 with purchase price.

NEWSWIRETrains News Wire

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