The company in the process of buying Montreal, Maine and Atlantic Railway plans to hire more people and regain business the railroad lost after last summer’s disaster in Lac-Megantic, Quebec, although it is unclear whether the company will return to transporting oil.
The Central Maine and Quebec Railway, which is a subsidiary of New York investment firm Fortress Investment Group, made the revelations in documents filed on Feb. 14 with the federal Surface Transportation Board as part of the regulatory process to buy a railroad. Fortress won a bankruptcy auction for the bankrupt MMA’s assets on Jan. 21. It expects the sale to be complete by the end of March.
Besides adding an unspecified number of jobs, the new company also hinted at other plans for the operation of the new railroad.
The filings were made by John Giles, a consultant for Fortress who was identified for the first time in the documents as CEO of the new Central Maine and Quebec Railway.
Giles estimated the new railroad would have annual revenue exceeding $5 million, but not more than $22 million, and would “seek to recapture traffic formerly transported by MMA, which may have been diverted to motor carriage as a result of the interruption of MMA service following the Lac Megantic disaster.”
It’s unclear if those projected revenue figures are gross or adjusted. MMA’s historic gross revenue exceeded $22 million, especially after the railroad began carrying crude oil. In 2012, the first full year MMA carried crude oil, it posted $36 million in gross revenue, according to Robert Keach, MMA’s trustee in the bankruptcy proceedings. The year before, it posted $24 million, Keach said.
Giles told the Bangor Daily News on Tuesday that recapturing lost traffic does not necessarily mean the Central Maine and Quebec Railway plans to immediately resume carrying crude oil through Lac-Megantic, Quebec.
It was an MMA train pulling oil-laden railroad cars that derailed in Lac-Megantic on July 6, 2013, causing an explosion that destroyed much of the town’s downtown area and killed 47 people. MMA filed for bankruptcy a month later.
“We have yet to have a conversation with regulators, authorities or shippers about the possibility of carrying crude over the [railway],” Giles wrote in the email to the BDN. “In fact we haven’t satisfied ourselves that we are capable of carrying crude safely and efficiently. That would and should be a pre-condition to doing so.”
As for the jobs the new railroad plans to create, Giles said he couldn’t offer details other than those included in the “Notice of Intent” that was made available to all MMA employees earlier this month and included as an attachment in the federal filing.
“The Notice of Intent is as accurate as we can make it,” Giles wrote. “On an absolute basis, we expect more positions than exist today. Exactly how many is not yet clear and it could hinge on how much work needs to be done, number of people applying and how those people interview. It will also be dependent on what it takes to get the [railway] back into fit condition. I really can’t be any more precise.”
MMA employs roughly 120 people in the United States and Canada. That number was closer to 170 before the July 6 accident in Lac-Megantic, but after the disaster the railroad laid off 74 employees. A $3 million loan from Camden National Bank in October allowed the railroad to rehire 28 workers, Keach previously told the BDN.
In related news, Keach has received a commitment from Camden National Bank to increase the railroad’s credit limit by $1.8 million to cover operation expenses as the sale is completed. U.S. Bankruptcy Judge Louis Kornreich has approved MMA’s plan to borrow an initial $1.3 million to cover expenses through March 14 and is expected to allow MMA to borrow the rest in March, Keach said.
In the filings with the federal Surface Transportation Board, Giles requests the regulatory process be expedited so the sale can close before the end of March, at which time MMA’s Canadian subsidiary’s insurance and Certificate of Fitness from the Canada Transportation Agency are set to expire.