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early December with the exception of NREX 5952, which has suffered some mechanical problems and was sent to Northtown Yard in advance of a lease return inspection.
We encourage your photo submissions related to current railroad events in the United States and Canada. Please send your timely news photos for consideration directly to: NEWS PHOTO EDITOR
OTTO M. VONDRAK
RAILNEWS@RAILFAN.COM
Please send your news stories for consideration directly to one of our listed news correspondents.
NEWS COORDINATOR KEVIN C. SNYDER
KSNYDER@RAILFAN.COM
BNSF RAILWAY SAYRE KOS
BNSFNEWS@RAILFAN.COM
CANADIAN SHORTLINES GLENN COURTNEY
CDNSHORTS@RAILFAN.COM
CANADIAN NATIONAL SAYRE KOS
CNNEWS@RAILFAN.COM
CANADIAN PACIFIC JAY BROOKS
CPNEWS@RAILFAN.COM
CSX TRANSPORTATION CHASE GUNNOE
CSXNEWS@RAILFAN.COM
IOWA INTERSTATE ALLAN HUNT
IAISNEWS@RAILFAN.COM
IRON ORE ROADS
DAVE SCHAUER
ORENEWS@RAILFAN.COM
KANSAS CITY SOUTHERN DANNY JOHNSON
KCSNEWS@RAILFAN.COM
MONTANA RAIL LINK JUSTIN FRANZ
MRLNEWS@RAILFAN.COM
NORFOLK SOUTHERN SCOTT LINDSEY
NSNEWS@RAILFAN.COM
PASSENGER AND COMMUTER OTTO M. VONDRAK
OTTO@RAILFAN.COM
REGIONALS/SHORTLINES - WEST GARLAND MCKEE
WESTSHORTS@RAILFAN.COM
REGIONALS/SHORTLINES - EAST STEPHAN KOENIG
EASTSHORTS@RAILFAN.COM
UNION PACIFIC KEVIN SNYDER
UPNEWS@RAILFAN.COM
STEAM/PRESERVATION JEFFREY D. TERRY
STEAMNEWS@RAILFAN.COM
WWW.RAILFAN.COM/RAILNEWS
CANADIAN NATIONAL SAYRE KOS
Sault Passenger Saga Continues
In early December, the process to identify a new operator for the Sault Ste. Marie-Hearst, Ont., passenger service along former Algoma Central rails continued, with a passenger rail working group carefully reviewing three proposals to operate the service. Applications were received from two Canadian and one U.S. operator to operate a minimum of 104 trips annually to the line’s northern terminus at Hearst. It is believed that once a successful candidate is identified, the schedule will change to match the peaks and troughs of ridership over the route. Sources also indicate that Canadian National will continue to operate the seasonal Agawa Canyon Tour Train until a qualified operator with solid financing and comprehensive experience in rail operations is ready to assume that operation, as well. Once a new operator is selected, the
ACR passenger rail working group would still require ample time to perform due diligence, a process anticipated to take well into first quarter 2016 to complete. The operation of the train between
Sault Ste. Marie and Hearst has been an ongoing issue since January 2015 when Canada’s federal government announced it was withdrawing a C$2.2 million annual subsidy of the passenger train and CN balked at operating the service without this financial support.
Waukesha Sub South End Shuttered
In early December, the Waukesha Subdivision between Franklin Park, Ill., and the Canadian National/CSX property line at Madison Street was taken out of service. Only one customer remains, and that industry sees service only a handful of times per year. When Wisconsin Central still owned
and operated this portion of the railroad, the single track south of Tower B-12 offered another route for traffic to and from Belt Railway of Chicago (BRC) via CSX’s Altenheim Subdivision and a connection between CSX and BRC at 14th Street.
CANADIAN PACIFIC JAY BROOKS
CEO Hunter Harrison Continues Play for NS After Norfolk Southern rejected the
initial offer made in early November, Canadian Pacific has revised its bid in an effort to merge with NS. The latest revised bid offers each NS shareholder US$32.86 in cash, 0.451 in shares of the combined company, and 0.451 of a contingent value right (which protects some shareholder value if stock prices drop below US$175). CP claims that this offer stands between US$128 and US$141 per share. If the offer is accepted, CP’s Chief Executive Officer Hunter Harrison plans to take control of Norfolk Southern immediately by placing CP in a voting trust, which would allow a CP executive to take the lead of NS. Under the plan NS would continue independent operation until the merger receives regulatory approval by the U.S. Surface Transportation Board. Norfolk Southern executives had rejected the third round of aggressive offers from CP that were designed to specifically sway shareholders with cash offers. The rhetoric from Calgary was ramped up in a press release that criticized NS for altering schedules to allow employees time off for Christmas. “Our economy runs year round and shippers must be able to get their goods to market in a timely fashion, regardless of the date or the amount of snow on the ground,” said CP president and chief operating officer Keith Creel. While CP has given indications it may
pursue a proxy fight should its latest offer be rejected, such actions are costly. Industry analysts are not convinced CP has the treasury to finance a hostile takeover. The charge to acquire NS is being led in part by “activist investor” Bill Ackman and his Pershing Square hedge fund. While the hedge fund is backing some of the financing for this deal, Pershing Square’s own position has been weakened lately due to heavy losses from investments in other sectors. What’s more, Ackman himself is the subject of an FBI investigation regarding alleged stock manipulation. Any prospect of an CP+NS merger
faces an uphill battle thanks to scrutiny from the Surface Transportation Board, uncertainty from the new Trudeau government in Canada, and a wave of opposition from shippers and connecting carriers on both sides of the border. —JAY BROOKS AND OTTO VONDRAK
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