Company walks away from Churchill railway deal weeks after announcing interest

A private company has walked away from the negotiation table only weeks after going public with their interest in taking over the flood-damaged Hudson Bay rail line and port of Churchill in northern Manitoba.

IChurchill cites disappointment with government of Canada as reason for pulling out

On Wednesday, May 23, it will be one year since a flood cut the rail connection to Manitoba's only ocean port. (Mike Spence/Town of Churchill)

A private company has walked away from the negotiation table only weeks after going public with its interest in taking over the flood-damaged Hudson Bay rail line and port of Churchill in northern Manitoba.

On May 4, a consortium of First Nations and a company called iChurchill announced they had reached an agreement to buy the rail line, port and associated assets, which are owned by Denver-based Omnitrax. 

On Tuesday, iChurchill released a statement saying it was stepping back from the deal, citing frustrations over the federal government's "unwillingness to engage in meaningful dialogue."

"We view that our bid was the most likely to get the railway repaired this summer," said iChurchill CEO Louis Dufresne in an interview. 

The group began preparing its statement of interest last September and had already made payments to Omnitrax to cover costs associated with a request for proposals to conduct repairs, Dufresne said. After meeting with federal negotiator Wayne Wouters last week, however, they hit a wall.

"Essentially, he confirmed our biggest fears, which was that they are backing a Toronto-based entity [Fairfax Financial] and essentially that was it," he said.

Fairfax Financial announced last November that it had partnered with One North, another group of First Nations and communities located along the rail line. 

A spokesperson for federal Natural Resources Minister Jim Carr said the federal government's priority "remains the safety and well-being of the people impacted by the loss of rail service.

"We will continue to work closely with the Town of Churchill, the Province of Manitoba and others in support of the immediate and long-term interests of the region. No negotiations with any parties will be conducted in public," the spokesperson said in an email.

Omnitrax Canada president Merv Tweed expressed disappointment about iChurchill withdrawing from the negotiations in an email to CBC News.

"We have always been willing to engage in constructive discussions with any and all genuinely interested parties and are continuing conversations with potential buyers. We remain committed to working expeditiously to arrive at a solution that would allow the railway to be repaired this season," Tweed said in the statement. 

Churchill has been without its lone rail line since May 2017 after spring snow melts and floods washed away large sections of the track.

The prices of fuel and foods spiked and set off a months-long debate between the federal government and Omnitrax over who should pay to repair the damaged rail line.

Omnitrax confirmed earlier this month it had received a signed letter of intent from iChurchill and the consortium, but said it had also received offers from several other Canadian companies.

Two other prospective buyers emerged last year — a consortium of about 15 First Nations called Missinippi Rail, and One North. 

Missinippi Rail signed a memorandum of understanding with Omnitrax last spring to acquire the rail and assets for $20 million. The group later merged with One North in an effort to expedite the deal.

"We continue our work toward a successful negotiation that will see a transfer of ownership conclude with the rail line repaired and rail service restored," said Churchill Mayor Mike Spence in an email.

A private company has walked away from the negotiation table only weeks after going public with their interest in taking over the flood-damaged Hudson Bay rail line and port of Churchill in northern Manitoba. 1:41

With files from Sean Kavanagh