Media Archive

Rail World agrees to purchase B&A

Article from The Piscataquis Observer, Vol. 164, No. 23, June 05, 2002

By Sarah MacIlroy
Staff Writer

BANGOR Ownership of the Bangor and Aroostook Railroad system may change in the near future as a purchase/sale agreement was reached last week with a Chicago company. Rail World, Inc.

Although the document was not submitted to court by press time, railroad trustee James Howard said he hopes the agreement will be filed with the court this week.

"We're pleased to get the agreement signed, but it's not fully executed at this point," Howard said. "(Once it's) fully executed, we'll file it with the bankruptcy court and request approval."

Chief Court Judge James Haines will decide whether or not to approve the agreement.

"We will certainly be recommending that he approve it," Howard said. "We hope that other creditors and other interested parties will come to that same conclusion. If they do and voice their support, it's likely the judge will approve it, but ultimately he has to make that decision as to whether it's a good deal. If there are parties opposing its approval, then it's hard to predict (the outcome).

These proceedings started late last year, when the B&A system, suffering under multi-million dollar debt was forced into bankruptcy. As part of that process, a trustee, Howard, was appointed by the court to oversee the sale of the railroad.

While the bankruptcy has proceeded, concerns were that the rail system would be broken up, with only part of Bangor and Aroostook's network remaining for use by industry. The network of B&A rail lines covering Maine also include affiliates, the Quebec Southern Railway, the Canadian-American Railroad, Northern Vermont Railroad, Newport and Richford Railroad and others.

Once the sales agreement is submitted to the bankruptcy court, Howard said a hearing will be set to determine if the arrangement will approved by the court.

"We're hoping there will be a hearing sometime in the first part of July to consider the approval, and part of that will be, if there are any other interested parties who have an interest in making a higher offer will have an opportunity to do so," he said.

Howard explained that part of the approval includes opening the agreement to other interested parties who want to make higher bids on the system.

"The process will be structured in that if anybody wants to make a bid, it's going to have to be higher and better than the Rail World bid," he said. "If there's a question whether something's higher or better, the judge will decide... It will be, in effect, an auction which will take place if there are other interested parties at the court hearing."

Although offers from other interested parties may differ, Howard said they would have to take Rail World's
agreement into consideration.

"There are other companies that have been following the process, have continued to ask for information and have expressed an interest, but I don't know what they will do when it comes time to submit bids."

Milo Town Manager Jane Jones, who has been one of the local officials working to keep the railroad in one piece, said the pivotal moment was seeing the actual agreement which as of press time had not been
filed yet.

"I'm very glad there appears to be forward progress," she said, "but the critical point for us will be when we're actually able to review the document.We'll be looking to see what the light the documents shed on Rail World's intent in terms of the Derby shops. From the regional development perspective, (we'll look at) how it appears the railroad is going to emerge from the bankruptcy as a healthy or potentially healthy rail unit that will allow us to rely on it as a piece of very needed infrastructure."

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