RailAmerica announces termination of OVR lease with CP
Published: December 18th 2009
Source: PRNewswire

JACKSONVILLE, Fla. - RailAmerica, Inc. (NYSE: RA) today reported that its subsidiary RaiLink Canada Ltd. has closed on a transaction with the Canadian Pacific Railway (CP) to terminate its lease of the Ottawa Valley Railway (OVR) line. Under the terms of the agreement, RailAmerica, Inc. received C$73 million in gross proceeds. The Company estimates net cash proceeds after taxes and transaction related expenses of C$69 to C$70 million.

RailAmerica's subsidiary will terminate its lease of the CP-owned OVR rail line between Smiths Falls and Camspur, near Petawawa ON, effective upon clearance of the remaining cars from the line. Under the Canada Transportation Act, CP has 60 days to decide if train service will be restored on the line. RailAmerica's subsidiary will continue to maintain and operate the CP-owned rail lines between Sudbury and Mattawa, ON, Mattawa and Temiscaming, PQ, and Mattawa and Camspur until dates in 2010 to be determined by CP.

The OVR operation consists of 342 mainline miles of track and primarily transports bridge traffic, chemicals, and pulp and paper products. For the nine months ended September 30, 2009, total revenue for OVR was C$13.3 million, operating income was C$4.6 million, depreciation/amortization expense was C$0.4 million and capital expenditures were C$0.7 million. The Company will record the income or loss from these operations in discontinued operations beginning in the fourth quarter of 2009.

RailAmerica, Inc. owns and operates short line and regional freight railroads in North America, operating a portfolio of 40 individual railroads with approximately 7,400 miles of track in 27 U.S. states and three Canadian provinces.
 

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