logo
Share SHARE
FONT-SIZE Plus   Neg

Canadian Pacific To Sell West End Of Its DM&E Line To Genesee & Wyoming

Canadian Pacific Railway Ltd. (CP, CP.TO) said Thursday that it has agreed to sell the west end of its Dakota, Minnesota & Eastern line to Genesee & Wyoming Inc. (GWR) for continued rail operations.

The purchase price is about US$210 million, subject to certain adjustments including the purchase of inventory, equipment and vehicles. 

The west end encompasses about 660 miles of Canadian Pacific's current operations between Tracy, MN and Rapid City, SD; north of Rapid City to Colony, WY; south of Rapid City to Dakota Jct., NE; and connecting branch lines, as well as trackage from Dakota Junction to Crawford, NE, currently leased to the Nebraska Northwestern Railroad Customers on the line ship about 52,000 carloads annually of grain, bentonite clay, ethanol, fertilizer and other products. 

The asset sale is expected to close by mid-2014. Upon closing, the new railroad will be named the Rapid City, Pierre & Eastern Railroad. Genesee & Wyoming expects to hire about 180 employees to staff the new company and anticipates those employees will come primarily from those currently working on the rail line.

For Canadian Pacific, it is anticipated the sale will result in a net after-tax write down of about US$240 million, subject to closing adjustments, which will be recorded in the company's fourth quarter 2013 financial statements. 

The deal is cash positive for Canadian Pacific and the sale will not have a material effect on anticipated future earnings. 

For Genesee & Wyoming, it is expected the deal will generate annual revenues of about $65 million and be immediately accretive to book and cash earnings per share in 2014.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

Business News

Quick Facts

Editors Pick
Social media app Snapchat has introduced a new location service, Snap Map, that will allow users of the app to see the location of all their friends on a map. The new feature will essentially allow a user to see where his friends are hanging out and what they are up to and also share his own location with friends in real time. The U.S. has suspended all imports of fresh beef from Brazil due to recurring concerns about the safety of the products. The suspension of shipments from Brazil, the fifth largest exporter of beef to the U.S., will remain in place until the Brazilian Ministry of Agriculture takes corrective action, the U.S. Department of Agriculture or USDA said in a statement. The annual Federal stress test was cleared by 34 top banks. The result shows strong capital levels and the ability of large banks to remain capitalized even in stressed situations. The Federal Reserve noted that these banks will be able to lend to households and businesses even at severe recession and throughout the economic cycle.
comments powered by Disqus
Follow RTT