|January 26, 2006
CN purchases RailAmerica's Alberta short lines for C$26 million
|CN announced on January 19, 2006 the purchase of the Alberta short-line railways owned by RailAmerica, Inc., of Boca Raton,
Florida, for C$26 million in cash. In addition, RailAmerica may receive up to C$4 million in future payments, depending on the
development of new business on the acquired railways.
CN is buying the Mackenzie Northern Railway (MKNR) and the Lakeland & Waterways Railway (LWR), both located north of
Edmonton, following RailAmerica's decision to divest its Alberta short lines. Also included in the transaction is the Central Western
Railway (CWR), a 21-mile railway in east-central Alberta used largely for training purposes that also carries a small amount of
Except for a small part of the CWR, all of the lines connect with CN's network. CN plans to upgrade MKNR and LWR trackage to
improve customer service and rail efficiencies, and to maximize the lines' potential for hauling larger volumes of oil and gas
infrastructure building materials, oil sands by-products, minerals, and forest and grain products in northern Alberta.
These feeder lines are a good fit for CN's merchandise and bulk commodity businesses at a time of major energy project
development in northern Alberta.
Operating the LWR will strengthen CN's connection to the Alberta Oil Sands, while the MKNR component will allow CN to participate
directly in the proposed natural gas pipeline projects and give the company access to modern on-line grain elevators and pulp plants.
The 600-mile MKNR runs north from Smith, Alberta, located about 130 miles north of Edmonton, to Hay River, N.W.T. The LWR, which
connects with CN in the Edmonton area, has 118 miles of track and extends to Boyle, Alta., where it in turn connects with the
Athabasca Northern Railway. The Central Western Railway, in east central Alberta, links with CN near Drumheller, Alberta.
CN began operating the rail lines today, following the close of the transaction with RailAmerica.
Together, the railways carried about 50,000 carloads of freight last year and employed roughly 130 people who today join a larger
organization with a strong interest in growing traffic on these rail lines. CN will honour the existing collective agreements of the
acquired railways. Integration of the properties into CN is expected to take less than six months.
CN Map of new Alberta lines (PDF)