Media Archive

B&A sale means local towns to get debt payments

Article from The Piscataquis Observer, Vol. 164, No. 42, October 16, 2002

By Jessica Lee
Staff Writer

MILO Locals are taking a wait and see approach to the sale last week of the assets of the Bangor & Aroostook Railroad system to Rail World Inc. of Chicago.

Rail World is paying $50 million to buy the assets of the B&A from owners. Iron Road Railways, in bankruptcy proceedings in the U.S. Bankruptcy Court in Portland.

The court approved the sale Oct. 8, but it will not be finalized until a Dec. 1 closing, according to Edward Burkhardt, president of Rail World's subsidiary Montreal, Maine & Atlantic Railway.

The towns of Milo and Brownville are watching the proceedings closely, through the eyes of their shared attorney, Jonathan Huntington of Eaton Peabody's Dover-Foxcroft office. Both towns are owed back taxes from the company and are the home to many longtime railroad employees,

Burkhardt said that any back taxes that B&A owed to towns will be paid soon after the December closing date. He said the bankruptcy trustee has declared them "priority payments," because Rail World cannot own the B&A assets if any liens remain. '

He added, "while [the back taxes are] not our problem, we want good relations with our towns."

The B&A System includes B&A Railroad, Canadian American Railroad Co., Quebec Southern Railway Co., Northern Vermont Railroad Co., Newport and Richford Railroad Co., Van Buren Bridges Co. and Logistic Management Systems Inc.

The B&A system owes the town of Milo an estimate $300,000 in back property taxes, according to Town Manager, Jane Jones. Brownville Town Manager Sophie Wilson calculated back taxes owed to that town at about $26,000.

"We're taking a wait and see attitude," said Jones. "We have not heard anything directly or indirectly, other than what we've seen in the media. We don't have enough details."

She said the town has heard rumors that there will be "significant jobs lost" in the restructuring of the rail lines, but nobody has officially counted heads locally. Specifically, she said, the town is concerned about the future of the Derby repair shops.

Burkhardt's assertion that the towns will receive payment on the bad debt, however, is good news, according to the town manager.

"If that is indeed the truth, that is absolute music to our ears," Jones said.

Wilson agreed with Jones, saying she is also taking a "wait and see" approach to the recent events. "We just don't have enough information," she said.

Wilson said that, as in neighboring Milo, Brownville is hometown to many railroad workers, some of whom hold the "higher paying jobs" in the community.

Burkhardt indicated that he will be stepping down as president and that Montreal, Maine & Atlantic will be under the direction of a management team and a board of directors. He said that company representatives will visit employees of B&A at sites around the state this week to answer questions and address concerns.

Because Rail World did not buy B&A-the company-but rather the assets of the company (the rail lines, cars and locomotives, among other physical structures) Burkhardt said all B&A employees will be laid off come
Dec. 1.

"This is a new company and we're hiring our workforce from scratch," he said, adding that the company expects to begin operations with about 300 people.

A year ago, the B&A system employed more than 435 workers, a number that has since dropped by about 80, officials report.

Burkhardt stressed that Rail World is giving preference to hiring former B&A employees, many of whom have already submitted applications and gone through the interview process. He said some workers have decided to take advantage of a new federal law that allows railroad employees to retire at age 60.

"Some of the old hats are saying, 'This is a good time to go,'" he said.

He said already it looks as though many of the slots with the company are slated to be filled with former B&A workers.

"From what I can see," he said, "there's been a fortuitous match between applicants and available jobs."

Burkhardt said some employees with B&A may experience a short lay-off period this winter, before being hired back to posts at Montreal, Maine & Atlantic in the spring.

In addition to hirings, the company is looking at a major maintenance of the rail lines and replace some of the rolling stock cars and locomotives. He said while conditions along the track are "generally OK,some things were sliding" as B&A went through the bankruptcy procedure. He said the company is going to fix areas with declining conditions along the lines, which are unsafe unless the trains reduce speed dramatically.

Also, the company is looking to streamline costs . The recent purchase of Canadian Pacific Railway will provide access to Montreal and to B&A's lines in Vermont Burkhardt said. B&A had formerly leased access to those lines.

He said he is looking forward to working with "the good people of Maine... it's a great state."

Jones, Milo's town manager, said that although many unknowns exist, the sale of the B&A assets appears to bring Milo one step closer back to its successful roots as a railroad town.

"We're looking forward to seeing the rail lines brought back to be an integral part of our econony. " she said.

NOTE - This article reflects the views of the author and not necessarily those of the TRC Alliance Team.