Railroad in deadly Canada derailment auctioned off
The Maine-based railroad that went bankrupt after a fiery oil train derailment killed 47 people last summer in Canada was sold at auction yesterday to a subsidiary of a New York City-based investment management company.
Railroad Acquisitions LLC, a subsidiary of Fortress Investment Group, won the closed-door bidding for Montreal, Maine and Atlantic Railway, according to one of the losing bidders. Details will be disclosed when the outcome is formally announced during court proceedings later this week in Maine and in Canada.
The Fortress subsidiary had submitted a so-called stalking horse bid of $14.25 million. A Fortress spokesman didn’t immediately return a call.
More than a dozen companies expressed interest in the bankrupt company, which owns about 500 miles of track in Maine, Vermont and in Canada, although it is unknown how many submitted bids.
One bidder, Eastern Maine Railway, a subsidiary of Canadian-based J.D. Irving, said it partnered with Springfield Terminal Railway Co. to bid for the Maine portions of the track.
“In the end, the trustee went forward with a single buyer of the entire MMA railway line (Maine, Quebec and Vermont track). We look forward to working with Fortress Investment Group of New York as they assume operation of the MMA railway,” Wayne Power, vice president of Irving’s transportation and logistics division, said in a statement.
Chapter 11 trustee Robert Keach declined comment on the proceedings yesterday but said previously that the goal was to recoup losses for creditors while keeping the entire rail line in operation.
In the July derailment, an unmanned Montreal, Maine and Atlantic Railway train with 72 oil tankers began rolling after it was left unattended by the solo crew member. The train picked up speed and derailed in downtown Lac-Megantic, causing an explosion and fire that destroyed about 30 buildings in the community 10 miles north of the Maine border.
Proceeds from the company’s sale would be used to repay creditors and victims, supplementing $25 million in insurance payouts available for wrongful death, personal injury, property damage, fire suppression and environmental impact.
Critics say the cleanup alone will exceed $25 million.
Chop Hardenbergh, editor of Atlantic Northeast Rails & Ports, a Maine-based industry newsletter, said he waited outside the law offices where the auction was held, and learned that the auction took only 40 minutes.
Fortress has a reputation for turning around distressed companies, he said.