J.D. Irving fails in bid to buy Maine portion of MM&A rail
New York Investment firm submits highest bid for company involved in Lac-Mégantic disaster
J.D. Irving Limited has lost its bid to buy some parts of the bankrupt Montreal, Maine and Atlantic Railway.
MM&A owned the train involved in the Lac-Mégantic, Que., disaster that killed 47 people in July. The runaway train derailed in the town, setting off a series of explosions in cars carrying crude oil that was destined for the Irving Oil refinery in Saint John.
However, a New York investment firm submitted the highest bid.
"In the end, the trustee went forward with a single buyer of the entire MM&A railway line (Maine, Quebec and Vermont track)," said a statement from Wayne Power, the vice-president of J.D. Irving's transportation division. "We look forward to working with Fortress Investment Group of New York as they assume operation of the MMA railway."
Chop Hardenbergh, the editor of a railway newsletter in the U.S., said it's cheaper to move one rail car through a single line than through several different companies.
"Classically in the railroad world, to have a single line move a rail car is simpler and cheaper than having to run it through two or three different rail lines."
The transportation division of JDI also operates the Maine Northern Railway and the New Brunswick Southern Railway, with its three short-line railroads covering 883 kilometres of track.
Hardenbergh says owning MM&A would have extended Irving's rail operations closer to Montreal and lowered its costs.
"Moving the traffic they have been moving from northern Maine into Saint John, they'll have to use another railway to do that — this new railroad. So it means some more expense," said Hardenbergh.
The takeover by the New York investment firm still has to be approved in a court hearing on Thursday.