Manitoba

Deal for sale of Churchill line 'will be completed shortly,' Hudson Bay Railway assures federal regulator

Window for repairing tracks before winter is closing

Posted: August 29, 2018

The rail line to Canada's only deep-water arctic port was damaged by flooding more than a year ago. Hudson Bay Railway says a deal for the sale of the rail line is close. (Mike Spence/Town of Churchill)

Hudson Bay Railway is telling Canada's federal transportation regulator a deal to sell the rail line leading to Churchill, Man., is imminent.

That statement comes from a response Hudson Bay Railway has given to the Canadian Transportation Agency, as part of an order the company is under to start repairing the flooded rail line to the northern Manitoba town.

"The negotiations on the Share Purchase Agreement have progressed to the point where both sides' present expectation is that the share purchase will be completed shortly," lawyers for HBR wrote to the transportation agency on Monday.

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The only land route to Churchill, 1,000 kilometres north of Winnipeg, was flooded in May of 2017. The window to complete repairs before this winter is closing.

Denver-based Omnitrax Rail Inc., the owner of both the rail line and the Port of Churchill, claims it can't fix the damaged tracks because it doesn't have the money.

'Ramping up the legal pressure': NDP

There have been months of negotiations between Omnitrax, the Canadian government, Toronto-based Fairfax Financial Holdings and several northern communities to buy the assets of Omnitrax.

In June, the Canadian Transportation Agency issued an order to Hudson Bay Railway to start repairs, following a complaint filed by Manitoba's Opposition NDP.

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"We are ramping up the legal pressure on Omnitrax to make sure repairs to the line finish before the winter season sets in  — and we will use every tool we have to make sure no Manitoban is left cut off from the rest of our province," said NDP Leader Wab Kinew in a statement Wednesday.

Manitoba Premier Brian Pallister and several ministers in his government have maintained throughout the railway closure that ports and rail issues are a federal responsibility.

In July the CTA started a compliance review of what efforts Hudson Bay Railway has undertaken to get the repair work started.

In late August the transportation agency started a new proceeding against HBR, putting the company on notice it must show cause for why it hadn't started the repairs, set deadlines and complied with the original order to do the work.

Bids for repair work received: HBR

HBR responded to the CTA this week, saying the company has issued requests for proposals to do the repairs and received bids to do the work early in August from qualified companies.

The company claims the group looking to buy the rail line and port is involved in the effort to get repair crews on the line.

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"The bids were reviewed by HBR, and given the impending sale of HBR the anticipated purchaser of HBR actively took part in those reviews," the company wrote to the transportation agency this week.

The negotiations for the purchase of Hudson Bay Railway's Manitoba assets, including a rail yard in The Pas and a marine fuel tank farm in Churchill, along with the rail line and port, have been going on for months.

In spite of the involvement of federal negotiators, a deal has been elusive as the transaction involves multiple companies owned by Omnitrax and a myriad of liabilities, including a number of lawsuits against various entities.

Omnitrax/HBR has estimated in the past it would take approximately 60 days and cost between $40 million and $60 million to get the minimum repairs completed to restore light passenger-rail service to Canada's only deep-water arctic port.

The closure of the line has meant increases in fuel and food costs for the community. Prime Minister Justin Trudeau said last year it was Omnitrax's responsibility to repair the damaged rail tracks.

A spokesperson for Omnitrax/HBR told CBC News the company could not provide an update on the state of negotiations at this time.

CBC News has asked federal government representatives for an update on efforts to purchase the assets from Omnitrax.

ABOUT THE AUTHOR

Sean Kavanagh
Civic affairs - city hall reporter

Born and raised in Winnipeg, Sean has had a chance to live in some of Canada's other beautiful places (Whistler, B.C., and Lake of the Woods, Ont.) as well as in Europe and the United States. In more than 15 years of reporting, Sean has covered some of the seminal events in Manitoba, from floods to elections, including as the CBC's provincial affairs reporter.