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January 08, 2014
Canadian Pacific to sell off west end of DM&E RR
•Genesee & Wyoming will purchse 660 miles of line from Tracy to Wyoming along with its branches
WESTBROOK, Minnesota (STPNS) -- Calgary, AB and Darien, CT
Canadian Pacific (CP) (TSX:CP) (NYSE:CP) and Genesee & Wyoming Inc. (G&W) (NYSE: GWR) announced today that they have executed an agreement pursuant to which CP will sell the west end of its Dakota, Minnesota & Eastern (DM&E) line to G&W for continued rail operations.
The west end encompasses approximately 660 miles of CP’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 (NNW).
The asset sale is expected to close by mid-2014, subject to approval of the U.S. Surface Transportation Board and satisfaction of other customary closing conditions. Upon closing, the new railroad will be named the Rapid City, Pierre & Eastern Railroad. G&W expects to hire approximately 180 employees to staff the new company and anticipates these employees will come primarily from those currently working on the rail line.
The agreement with G&W concludes the comprehensive strategic review process that was launched by CP on December 4, 2012. Canadian Pacific has operated the rail line in this area since it assumed operational control of the DM&E railroad in 2008 and will
continue to own and operate approximately 1,900 miles of former DM&E track following the sale of the west end.
"There is a strong long-term franchise here and we are pleased to have found a partner in Genesee & Wyoming, which will maintain a high standard of customer service,” said CP Chief Executive Officer, E. Hunter Harrison. “South Dakota remains an important economic driver in the Midwest and CP looks forward to working with G&W.”
Jack Hellmann, G&W’s Chief Executive Officer commented, “We are excited to be working with CP to expand G&W’s rail operations into South Dakota, as well as into Wyoming, Minnesota and Nebraska. Given G&W’s commitment to safety, service and long-term infrastructure investment, we believe this transaction will significantly benefit our customers, the employees we plan to hire, the communities that we serve, and our connecting Class I rail partners.”
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