Lac-Mégantic railway MM&A could be sold by December
Montreal, Maine & Atlantic entertaining offers from 8 companies, including 2 Canadian ones
Court-appointed officials say the sale of the insolvent railway involved in last July's deadly explosion and fire in Lac-Mégantic, Que., could be wrapped up in mid-December once a formal process is established to award compensation to victims and other claimants.
Court filings in Quebec say they U.S. trustee is entertaining interest from eight potential buyers for the Montreal, Maine & Atlantic Railway.
The Canadian monitor, Richter Advisory Group Inc., has been in contact with at least two groups in Canada.
Court officials declined to identify the interested parties, but the transportation subsidiary of conglomerate Irving on Canada's East Coast says it continues to evaluate the deal.
"We're considering all of our options," said Mary Keith, a spokeswoman for J.D. Irving, operator of the NB&M Railways.
The proposed sale schedule, which must be approved by the Quebec and U.S. bankruptcy courts, would see Oct. 31 as the deadline for expressions of interest from potential bidders.
A lead bidder would be chosen Nov. 15 that would set a floor price for other bidders. A formal auction of qualified bidders would take place Dec. 13.
Interested buyers would be able to bid on the railway's total assets or just those in Canada or the U.S.
However, potential buyers must be prepared to continue providing service to customers in Quebec, Maine and Vermont.
MMA customers want service
Dozens of MMA's customers wrote letters stating that an end of railway services would "have significant financial consequences and would result in job losses in the regions and the closure of various companies." A recent survey of businesses by regional economic development agencies determined that 700 jobs and investments totalling $20 million would be at risk if the railway is shut down.
The officials said they hoped a formal claims process will be approved by the courts by Nov. 30.
The crude oil that exploded in Lac-Mégantic was as volatile as gasoline, but was documented as a less-dangerous product akin to diesel or bunker crude, the Transportation Safety Board has said.
MMA's American assets have been estimated at between $50 million US and $100 million, US while the Canadian assets were pegged at about $18 million. Proceeds from the sale would also be complemented by a $25-million policy from XL Insurance.
Insurer wants out
Meanwhile, Travelers Property Casualty Company of America, which has paid $250,000 to repair the damaged track in Quebec, is trying get out of the rest of its $7.5 million US coverage for the railway.
A hearing on the issue is scheduled for Wednesday in Maine, with officials hopeful that a formal claims process will be approved by the courts by Nov. 30. Thousands of claims are expected to be filed, according to the monitor's third report.
Meanwhile, Camden National Bank has approved a US$3-million line of credit secured by the railway's U.S. assets to support ongoing operations. However, the funds wouldn't be enough for necessary track repairs or to pay lawyers and other professionals involved in the court proceedings