Jacksonville, Fla.-based RailAmerica, Inc. said its subsidiary RaiLink Canada Ltd. has closed on a transaction with Canadian Pacific to terminate its lease of the Ottawa Valley Railway (OVR) line.
Under the terms of the agreement announced Friday, RailAmerica, Inc. received C$73 million (US$69 million) in gross proceeds. The company estimates net cash proceeds after taxes and transaction related expenses of C$69 million 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, Ontario, 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.
RaiLink Canada will continue to maintain and operate the CP-owned rail lines between Sudbury and Mattawa, Ontario, Mattawa and Temiscaming, Quebec, and Mattawa and Camspur until dates in 2010 to be determined by CP.
OVR 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. RailAmerica said it will record the income or loss from these operations in discontinued operations beginning in the fourth quarter of 2009.