petervonb wrote: CP can now pick up intermodal - and a whole lot of other stuff - in Kansas City and move it across their system. That would mean shipments from LA/Long Beach could be picked up in KC instead of Chicago for delivery in Toronto and Montreal. Tons of stuff from the South and Southwest (and Mexico) destined for Winnipeg and Calgary and Vancouver - or anywhere else in Canada - won't have to go through Chicago via BNSF/UP but can be picked up from KCS (or BNSF/UP) in Kansas City
CP can now pick up intermodal - and a whole lot of other stuff - in Kansas City and move it across their system. That would mean shipments from LA/Long Beach could be picked up in KC instead of Chicago for delivery in Toronto and Montreal. Tons of stuff from the South and Southwest (and Mexico) destined for Winnipeg and Calgary and Vancouver - or anywhere else in Canada - won't have to go through Chicago via BNSF/UP but can be picked up from KCS (or BNSF/UP) in Kansas City
I thought that the originating road usually dictated the hand off points to second carriers, arranged so that the originating line got maximum mileage?
Murphy Siding wrote: deepspire wrote:BNSF, Union Pacific may challenge railroad merger | Dallas Morning News U.S. railroads won't feel the effect for several years after the purchase of Sioux City, South Dakota-based DM&E Arggg!!! They've got their Siouxs mixed up again! It's Sioux Falls, S.D. (my home town), and Sioux City, Iowa! Silly Fort Worth Morning News anyhow!
deepspire wrote:BNSF, Union Pacific may challenge railroad merger | Dallas Morning News U.S. railroads won't feel the effect for several years after the purchase of Sioux City, South Dakota-based DM&E
U.S. railroads won't feel the effect for several years after the purchase of Sioux City, South Dakota-based DM&E
I recommend that you SUE!!
LOL...
Couldn't pass that one up...lol...
LC
HankDiggs wrote: Folks, I'm confused about what the merger will mean for the DM&E / Mayo Clinic / Rochester battle. I thought that the city & clinic were fighting DM&E expansion within Rochester that would expedite DM&E's access to the PRB. Doesn't the merger mean that DM&E / CP trains could just bypass the city?
Folks, I'm confused about what the merger will mean for the DM&E / Mayo Clinic / Rochester battle. I thought that the city & clinic were fighting DM&E expansion within Rochester that would expedite DM&E's access to the PRB. Doesn't the merger mean that DM&E / CP trains could just bypass the city?
Rochester's only effective weapon to fight the DM&E was lobbying the FRA to turn down the loan request for the upgrades and the Powder River extension. To that end, they hired a whole staff of lobbyists (including the former Majority Leader Tom Dashle). They won that battle, but the presence of CP makes a federally guaranteed loan unnecessary.
I don't believe DM&E has any intention of bypassing Rochester but instead continuing to run right through town. I'm sure they would be willing to discuss a bypass constructed primarily at Rochester's expense.
Just a few things here:
1. UP may want trackage rights from Clinton to KC. I'm told they pay high dollars for rights over the BNSF currently, and BNSF limits them to the amount of trains they can run a day. I dont know why UP would want to give that up, even after building the Edelstein Connection.
2. One ICE manager emailed me they know about as much as us railfans do. They only have received one letter from Schieffer. There was an employee meeting in Sioux Falls for the office folks Wed p.m., not sure what was all said there.
3. CN I'm told was one of the finalists, but DME thought the CP was a better fit.
Only posting from what I hear, take it or leave it.
MILW86A
edbenton wrote:Lets see here STB plan to build into the PRB check approved by the STB check. Cash and finacing ready CHECK. Seeing the MAYO group PUKE and Spew a LATTE all over their papers if you are an employee of the DM&E today PRICELESS. Somethings even Mastercard can not get you it takes a merger to do.
Indeed, with improved DM&E track, there is a possible upside in this deal for ethanol being shipped out of the farm country. In South Dakota, according to data from the SD DOT (2006 data), there are 14 ethanol plants in operation or close to operation. However, 12 of those are along the BNSF and 2 on the DM&E. I do not have similiar data for Minnesota or the ICE in Iowa/Missouri.
Perhaps some of these plants will be expanded. However, I question how many more ever will be built. With corn north of $3, a plant that looked great using $2.20 corn a few years ago is not such a great deal anymore. Likewise, without the federal subsidy, it is questionable that any plant would be profitable. A lot of research is being done on the production of ethanol from less costly ag products than corn.
My point is that corn based ethanol production may be near its peak, and if I were the CP I would not rely upon it to generate any large increase in traffic.
SFbrkmn,
You make a good point, I think CP is indeed looking south in the future. I don't know if how many people remember the article in Trains not too long ago where they were talking about the merger puzzle and KCS and CP came up. The author basically ruled out a CP/KCS merger as the two RR's didn't come anywhere near connecting, so it wouldn't work. The other class 1's with the exception of CN would give too much dominance in the region and likely be denied by the STB. Seems with this merger CP took a giant step toward closer ties with KCS.
Also there is a strong plug on the CP website about their partnerships which allow CP access to Mexico. It's been there for quite a while, only now it seems that CP is a little closer to being able to make it their on their own.
One final thought as someone pointed out, I'm sure CP is eager to get PRB coal moving across it's network. But only a few people have commented on the strong up and coming ethanol market in the region. While not as big a deal as PRB coal, I'm sure that was also a huge factor in helping CP decide.
petervonb wrote: The $6 billion bandied about in the last year included the FRA loan to expand to the PRB and upgrade the rest of the line to carry the traffic and weight increase; and it undoubtedly included investment in motive power strong enough to haul the coal. With the CP acquisition, the motive power costs would not necessarily be so great - CP might well be able to efficiently move locomotives around so that fewer new ones would need to be purchased. CP might also have less expensive in-house MOW capacity, or might be able to get better pricing for the work.
The $6 billion bandied about in the last year included the FRA loan to expand to the PRB and upgrade the rest of the line to carry the traffic and weight increase; and it undoubtedly included investment in motive power strong enough to haul the coal. With the CP acquisition, the motive power costs would not necessarily be so great - CP might well be able to efficiently move locomotives around so that fewer new ones would need to be purchased. CP might also have less expensive in-house MOW capacity, or might be able to get better pricing for the work.
The rough breakdown for the project is $3B for track, $1B for locomotives and $2B for the coal cars. It is expected CP will use utility owned cars, thus bringing the project back to $4 billion.
Murphy Siding wrote: Arggg!!! They've got their Siouxs mixed up again! It's Sioux Falls, S.D. (my home town), and Sioux City, Iowa! Silly Fort Worth Morning News anyhow!
The easy way to remember which is which is Sioux Falls is the one nearest the North Pole, a difference most apparent in February!
Over to you, Murph, lol
petervonb wrote: deepspire wrote:BNSF, Union Pacific may challenge railroad merger | Dallas Morning News ....DM&E has been trying to expand into Wyoming's Powder River Basin coal fields, where Union Pacific and Burlington Northern are the only railroads with access. U.S. regulators in February rejected closely held DM&E's application for a $2.33 billion loan to build a rail line into the region.....\ This statement is a bit misleading. It appears right after the paragraph stating the acquisition must be approved by the STB and thus implies that the STB rejected the loan application. Of course, we know the loan application was rejected by the FRA and the FRA has nothing to do with the STB approval.
deepspire wrote:BNSF, Union Pacific may challenge railroad merger | Dallas Morning News ....DM&E has been trying to expand into Wyoming's Powder River Basin coal fields, where Union Pacific and Burlington Northern are the only railroads with access. U.S. regulators in February rejected closely held DM&E's application for a $2.33 billion loan to build a rail line into the region.....\
....DM&E has been trying to expand into Wyoming's Powder River Basin coal fields, where Union Pacific and Burlington Northern are the only railroads with access. U.S. regulators in February rejected closely held DM&E's application for a $2.33 billion loan to build a rail line into the region.....\
This statement is a bit misleading. It appears right after the paragraph stating the acquisition must be approved by the STB and thus implies that the STB rejected the loan application. Of course, we know the loan application was rejected by the FRA and the FRA has nothing to do with the STB approval.
Not at all, both the FRA and the STB are regulatory agencies.
Chris30 wrote: So if the purchase of the ICE doesn't work out for the CP, does that mean they're going to sell it to the MRL?? Just my gut feeling that the CP is more interested in the ethanol traffic than the possibility of future coal traffic from the PRB if, an when, an extension is ever built. The UP & BNSF might have tolerated a smaller regional invading their PRB turf, but another class I? CC
So if the purchase of the ICE doesn't work out for the CP, does that mean they're going to sell it to the MRL?? Just my gut feeling that the CP is more interested in the ethanol traffic than the possibility of future coal traffic from the PRB if, an when, an extension is ever built. The UP & BNSF might have tolerated a smaller regional invading their PRB turf, but another class I?
CC
ICE is heavy, or will be heavy with ethanol soon. Plants in Aurora, SD; Janesville, MN; for DME and Welcome, MN; Winnebago, MN; Lyle, MN; Hartley, IA; Charles City, IA; Dyersville, IA for ICE. Much tonnage to be sure. Winnebago is the only small plant on either line. The plant in Welcome, MN will be joint with UP, and UP as well gets a lot of traffic from the Charles City plant via interchange at Mason City. There is still question about the Hartley plant being joint with UP since they have long standing trackage rights up there (the confusion is the exact location of the plant). Seems UP's more direct route to Texas and Mexico is an asset.
Murphy Siding wrote: beaulieu wrote: .....The money amounts quoted by Murphy Siding are conditional hedges of the purchase price for DM&E. If the hurdles to constructing the PRB line are too high, then the CP will pay less for the DM&E. Make no mistake the PRB is the main prize in all this, ..... That is really an interesting thing, if you stop to think about it. CP pays another $1B, if it can get into the PRB by a certain date. Yet, the ones who hold the key to getting there now, are CP! It makes for a somewhat weird setup to me. I wonder is CP didn't feel they had to buy DM&E before somebody else did?
beaulieu wrote: .....The money amounts quoted by Murphy Siding are conditional hedges of the purchase price for DM&E. If the hurdles to constructing the PRB line are too high, then the CP will pay less for the DM&E. Make no mistake the PRB is the main prize in all this, .....
Thanks to Chris / CopCarSS for my avatar.
deepspire wrote:BNSF, Union Pacific may challenge railroad merger | Dallas Morning News....DM&E has been trying to expand into Wyoming's Powder River Basin coal fields, where Union Pacific and Burlington Northern are the only railroads with access. U.S. regulators in February rejected closely held DM&E's application for a $2.33 billion loan to build a rail line into the region.....\
I look at the proposed acquisition as a lot more than just CP access to the PRB - though that in itself can be a big deal: As was mentioned above, CP can transport the coal all the way to Philly.
CP currently hauls intermodal trainloads of imports from Vancouver to the east, including Chicago. In Chicago, the loads move to NS, CSX or south on CN.
CP will increase their options exponentially with this acquisition - with or without the PRB.
Postbulletin.com: DM&E sale seen as a 'fresh start' by Rochester leaders
The sale of the Dakota, Minnesota & Eastern Railroad to Canadian Pacific Railway is Rochester's and Winona's chance for a fresh start, local officials say.
"We think this is a new opportunity," said Mayo Clinic spokesman Chris Gade. "A new set of owners that will, hopefully, be responsive to the needs of our community and other communities along the line."
Canadian Pacific announced the $1.48 billion transaction late Tuesday. The deal, scheduled to close in the next 30 to 60 days, includes added incentives for completion of DM&E's planned expansion into Wyoming's Powder River Basin coal territory.
DM&E and CP intersect in Minneapolis, Chicago and Minnesota City, just north of Winona.
Serious concerns over projected train traffic increases from the Powder River Basin expansion remain, but local officials say they intend to set aside the old enmity with DM&E when they make the first call to CP, said Rochester City Council President Dennis Hanson.
"For us to extend a hand for a good handshake to get off on the right foot is pretty important," Hanson said.
Winona Mayor Jerry Miller described Canadian Pacific as easy to work with -- "a lot better than any other railroad, I feel, in our area here."
Winona contacted CP about two to three weeks ago, Miller said, after news reports that it was trying to buy DM&E.
"To me, it just made sense then that the Canadian Pacific would make a viable match," he said.
Miller believes the purchase gives Winona the right, finally, to ask for mitigation. Before, the city was thwarted in its requests because DM&E does not actually enter the town, although its traffic passes through on other railroads' lines.
"Now, we should have a little bit of clout in this deal," Miller said.
DM&E President and CEO Kevin Schieffer could not be reached for comment this morning. Rochester officials believe the sale means they have seen the last of him -- and if so, it's a fact they'll celebrate. The war of words between Schieffer and local officials was often scathing and personal, and the chance of a deal between the two sides seemed bleak.
"Frankly, (Canadian Pacific) can't be more difficult to deal with than Mr. Schieffer has been," said Ken Brown, an Olmsted County commissioner. "Nobody has been more difficult than Mr. Schieffer."
Rochester Coalition Statement:
ROCHESTER, Minn., Sept. 5 /PRNewswire/ -- We are encouraged by the Canadian Pacific's acquisition of the Dakota, Minnesota and Eastern Railroad (DM&E) and we look forward to meeting the railroad's new owners.
As proposed, the DM&E rail expansion remains a major concern for our community and the railroad's acquisition doesn't change our commitment to protecting the people of Rochester and the patients and staff at Mayo Clinic.
Several major obstacles must be addressed before the rail expansion project moves forward, including litigating complex eminent domain challenges in South Dakota and Wyoming, completing an environmental impact review on DM&E's critical Iowa line, solving bypass issues in Mankato, Minn., and Pierre, S.D., and reaching mitigation agreements with the cities of Brookings, S.D., and Rochester, Minn.
The Rochester Coalition represents the city of Rochester, Olmsted County, the Rochester Area Chamber of Commerce and Mayo Clinic. For more information, visit http://www.dmetraintruth.com.
Union Pacific Corp. and Burlington Northern Santa Fe Corp., the two largest U.S. railroads, probably will challenge Canadian Pacific Railway Ltd.'s purchase of Dakota, Minnesota & Eastern Railroad Corp., an analyst said.
"They would probably lose the regulatory fight, but they would just be playing for time and could delay approval for up to one year," Rick Paterson, a UBS Securities analyst based in New York, said Wednesday in a note to investors. The acquisition must be reviewed by the U.S. Surface Transportation Board.
DM&E has been trying to expand into Wyoming's Powder River Basin coal fields, where Union Pacific and Burlington Northern are the only railroads with access. U.S. regulators in February rejected closely held DM&E's application for a $2.33 billion loan to build a rail line into the region.
Canadian Pacific's planned $1.48 billion purchase of DM&E, announced last night, is a long-term "negative" for Union Pacific and Burlington Northern, Paterson said in his note. He rates Omaha, Nebraska-based Union Pacific a "buy" and Fort Worth, Texas-based Burlington Northern a "neutral."
Union Pacific spokesman James Barnes said he couldn't comment on whether the railroad will challenge the acquisition. Burlington Northern is "not in a position to speculate on it right now," spokeswoman Mary Jo Keating said.
Union Pacific shares fell $3.76, or 3.3 percent, to $108.79 at 3:04 p.m. in New York Stock Exchange composite trading. Burlington Northern declined 46 cents to $82.44. Calgary-based Canadian Pacific dropped C$2.72, or 3.7 percent, to C$70.75 on the Toronto Stock Exchange.
Coal is the largest single product shipped by both Union Pacific and Burlington Northern. Union Pacific said 61 percent of the coal it moved in August came from the Powder River Basin, where the two railroads share a joint line to ship the fuel east to electric utilities.
The purchase probably would lower coal-hauling rates from the region for the utilities, which might mean less revenue for Union Pacific and Burlington Northern, said Jason Seidl, a New York-based analyst for Credit Suisse. He rates both railroads "outperform."
Seidl said he expects U.S. regulators to approve the transaction.
When Canadian Pacific becomes established in the Powder River Basin, "you're not going to be able to get some of the growth rates you've had in the past," he said. DM&E under Canadian Pacific ownership could haul 25 million tons of coal a year as soon as 2012, he said.
Union Pacific's Barnes said an average coal train for the railroad hauls 14,900 tons.
U.S. railroads won't feel the effect for several years after the purchase of Sioux City, South Dakota-based DM&E is completed, because of the time needed to get regulatory approval and finish construction of a new line, Bear Stearns & Co. analyst Edward Wolfe said in a note to investors.
"DM&E has always represented a potential threat," Wolfe said in the note. "Our sense is that today's announcement brings this threat much closer to a reality but that it likely remains 3-4 years out (after STB approval and build out) at the earliest before CP/DM&E could take meaningful share."
Wolfe, who is based in New York, rates Union Pacific and Burlington Northern both as "peer perform."
Union Pacific "has had a right of first refusal to purchase the DM&E since it acquired the Chicago & Northwestern in 1995," Barnes said. "Subsequently, Union Pacific concluded that regulatory agencies would not allow a purchase of the DM&E by Union Pacific and therefore took steps to ensure that this right didn't interfere with the DM&E's opportunity to attract financing or investors."
All right, here's a dumb question; (I always get DM&E and IC&E mixed up) which one wants to go into the Powder River Basin?
EDIT: Answeared in above post.
RRKen wrote: EJE818 wrote:It is kind of too bad that the blue and yellow IC&E and IMRL power will fade eventually, but that progress. Maybe that means the IC&E and DM&E engine will be able to roam the CP system, which I really wouldn't mind at all. Another good thing is maybe CP will be be able complete the PRB project faster then the DM&E would have done. Lets see. Initial cost of DME purchase is $1.45 billion. With something of a $1 billion by 2025 if the coal line is built. I forget the exact wording of that proviso. None the less, add to that the estimated $6 billion to complete the PRB project, and you are talking about some serious money. DM&E was not able in the ten years since they announced this project to come up with the funds. Everyone told me what a "Hot Prospect" this was going to be. I have said in the beginning, show me the money. It never appeared. Also remember, the DME was run by a lawyer who had no previous experience in running a railroad. His underlings did. His purchase of the IMRL assets was a prime example of how he handles things. So after blowing $40 million on this proposed project (they needed a loan from the FRA to pay off the debt incurred in jumping through all the hoops), he will probably end up with a Gold Parachute.
EJE818 wrote:It is kind of too bad that the blue and yellow IC&E and IMRL power will fade eventually, but that progress. Maybe that means the IC&E and DM&E engine will be able to roam the CP system, which I really wouldn't mind at all. Another good thing is maybe CP will be be able complete the PRB project faster then the DM&E would have done.
Lets see. Initial cost of DME purchase is $1.45 billion. With something of a $1 billion by 2025 if the coal line is built. I forget the exact wording of that proviso. None the less, add to that the estimated $6 billion to complete the PRB project, and you are talking about some serious money. DM&E was not able in the ten years since they announced this project to come up with the funds. Everyone told me what a "Hot Prospect" this was going to be. I have said in the beginning, show me the money. It never appeared. Also remember, the DME was run by a lawyer who had no previous experience in running a railroad. His underlings did. His purchase of the IMRL assets was a prime example of how he handles things. So after blowing $40 million on this proposed project (they needed a loan from the FRA to pay off the debt incurred in jumping through all the hoops), he will probably end up with a Gold Parachute.
Dakguy201 wrote: I'm puzzled.This is not the first time I've seen a reference to the DM&E being a connection to KCS at Kansas City. As far as I am aware, the southmost point the DM&E achieves is Manley Iowa (or perhaps Mason City) on trackage rights on the UP.
I'm puzzled.
This is not the first time I've seen a reference to the DM&E being a connection to KCS at Kansas City. As far as I am aware, the southmost point the DM&E achieves is Manley Iowa (or perhaps Mason City) on trackage rights on the UP.
Heartland to Albert Lea via UP's Heartland sub., then south to Mason City via the Albert Lea sub. Even that will not last much longer. DME/ICE are one in the same as far as cars moving on either line. Anything on DME goes to ICE, Mason City, then east to the River before going south again to KC.
Dakguy201 wrote: I think the KCS connection being discussed is the IC&E line that runs down the Mississippi and then southwest from Muscatine. Even assuming DM&E has rights over that line, for any shipment originating or terminating in the Dakotas (or Powder River), it is very much the long way around. Both the UP and the BNSF have routes that are much shorter.
My figures show almost 600+ miles more from the PRB to KC via DME/ICE versus UP's route via the Marysville to KC. Not even close to being competitive as far as coal.
CP feeds lots of traffic to UP every day out of St. Paul for Ft. Worth, and DME interchanges most all their traffic for the south to UP at Mason City. It has been my experience that most of the traffic ends up at customers on UP's lines anyway. UP's Spine line can out run the ICE line to KC by almost a day. And CP's traffic from St. Paul does not sit in some yard on UP. The train only works one station all the way to FTW. In most cases, by the time the ICE gets to KC to interchange their cars out of St. Paul, the cars leaving about the same time on UP have almost arrived in McAlester, OK. The customer will be the final guage of what goes where off the DME.
I said the same thing when I saw ex-MILW Bandits in Portage, WI about 7 years ago, but I still see them. CP has never been known for re-painting merger engines. I saw a picture of a CP train in Oconomowoc, WI with two engines in the consist, a CP and a SOO. They had the exact same roadnumbers. I wouldn't expect to see any of the power on the DM&E to get re-painted.
Same thing goes with MOW equipment. There is still a Jordan spreader and a Russell plow in Thieft River Falls, MN, and both are still in SOO paint and numbers. Also, Portage has a SOO-Milwaukee system push plow. When CN gets MOW equipment, they just scrap it.
I am curious about the CP SD40-2's that DM&E owns. Maybe someone was thinking ahead...
Phil
I worked for the Soo, CP, I&M Rail link and currently work for the ICE . When I found out last night at 0200 I couldn't believe it!!!!!!!! I Hope we get the conductor craft back. I trained in Pigs eye back in 1996 and was a qualified conductor. Then they sold us and everone took a $12 a day pay cut and removed the conductor craft. It was hell ever since. I know alot of employees have protection agreements in place and the ICE is very strong about keeping us protected. I hope it's all wrapped up in 6 months. Alot of us have been beaten prior to the ICE and worry that not much will change. I hope alot changes, we deserve a class1 status.
I would love to find a link to their T&E and Yardmasters Contracts Anyone?
Jess
Here is the complete CP press release:
Canadian Pacific announces agreement to acquire DM&E Railroad September 4, 2007Calgary, Alberta
Canadian Pacific Railway Limited (TSX/NYSE: CP) announced today that it has reached an agreement to acquire Dakota, Minnesota & Eastern Railroad Corporation and its subsidiaries (DM&E) for US$1.48 billion. With this value-enhancing transaction, CP expands its current network by approximately 2,500 miles and increases its access to U.S. Midwest markets including agri-products, coal and ethanol. The deal consists of a US$1.48 billion cash payment at closing and future contingent payments of up to approximately US$1.0 billion. Future contingent payments of US$350 million will become due if construction starts on the Powder River Basin expansion project prior to December 31, 2025. Further future contingent payments of up to approximately US$700 million will become due upon the movement of specified volumes of coal from the Powder River Basin over the Powder River Basin extension prior to December 31, 2025.
"The DM&E is an excellent fit for Canadian Pacific making this a strategic end-to-end addition to our network," said Fred Green, President and Chief Executive Officer of CP. "The DM&E is a high-quality, growing regional railroad that complements our existing franchise. This investment presents the opportunity for future growth through further expansion of our network and is accretive to our EPS in 2008."
"There are natural synergies between our two railroads which make this a very attractive transaction. We have a solid transition plan that I am confident we will implement successfully. CP is the safest railroad in North America and we will work together to build on the significant improvements the DM&E has made in operating efficiency and safety over the past several years. This includes CP's intention to spend an additional US$300 million of capital for further upgrading of the regional railroad over the next several years."
"Canadian Pacific is our natural partner and we are very pleased with this deal. The logic of this acquisition is compelling," said Kevin Schieffer, President and CEO of the DM&E. "I'm proud of the DM&E and the organization we've built; our operating ratio is one of the best in the industry. The combination of our two companies and the resulting efficiencies will be very positive for our customers. CP is not only a natural operating fit; we also share a commitment to our employees, our customers and the communities we serve as well as a vision for the potential of the Powder River Basin."
The addition of the DM&E extends the reach of CP's network. It increases the rail network, and adds new customers and expands the service available to customers of both companies. The DM&E is the largest regional railroad in the U.S. and the only Class II railroad that connects and interchanges traffic with all seven Class I railroads, connecting with Canadian Pacific at Minneapolis, Winona, MN and Chicago. It had 2006 freight revenues of approximately US$258 million, which is expected to grow to approximately US$280 million, or by nine per cent in 2007. The DM&E is headquartered in Sioux Falls, SD and has approximately 1,000 employees, 2,500 miles of track and rolling stock that includes 7,200 rail cars and 150 locomotives. It serves eight states; Illinois, Iowa, Minnesota, Missouri, Nebraska, South Dakota, Wisconsin and Wyoming with access to Chicago, Minneapolis/St. Paul, Kansas City and key ports.
The DM&E has been pursuing a strategy to become the third rail carrier in Wyoming's Powder River Basin. The Powder River Basin is North America's largest and most rapidly growing source of low-cost, low-sulphur coal as well as the largest single rail market in terms of volume.
"Canadian Pacific is excited about the prospect for growth in the coal-rich Powder River Basin," Mr. Green said. The DM&E's favorable geographic position provides a unique ability to create an efficient and competitive additional link to midwestern and eastern utilities. We have created a disciplined plan aimed at facilitating a decision on the expansion and ensuring the investment provides returns that exceed our thresholds. Our purchase agreement has been structured to share further upside as the benefits of the expansion are realized. We are confident this will provide maximum long-term value for our shareholders."
"With our strong balance sheet, this investment represents the best use of our free cash," said Mike Lambert, Chief Financial Officer of CP "We have secured fully committed acquisition financing as part of this transaction. Permanent financing for this acquisition and future financing for a potential PRB expansion will be structured to preserve appropriate debt and coverage ratios for our investment grade rating."
In conjunction with this purchase, Canadian Pacific has suspended activity under its current share repurchase program that commenced in March of 2007. CP has purchased 3,209,790 shares in 2007.
With the successful completion of this transaction, which is expected to close in the next 30 to 60 days, Canadian Pacific confirms that its outlook in 2007 for diluted earnings per share, excluding foreign exchange gains and losses on long-term debt and other specified items, remains unchanged in the range of CDN$4.30 to CDN$4.45.
The CP/DM&E transaction is subject to review and approval by the U.S. Surface Transportation Board (STB), during which time the shares of DM&E will be placed into an independent voting trust. The review process is expected to take less than a year. CP expects that the operation will become part of CP's U.S. network upon completion of the review. The voting trust is required by US law so that CP does not exercise control over DM&E prior to approval of the transaction by the STB.
Conference Call
Fred Green, President and CEO, Mike Lambert, Executive Vice President and CFO and Kathryn McQuade, Executive Vice President and COO, will be available to discuss this announcement with investment analysts and the media in a conference call beginning at 11 a.m. Eastern time (9 a.m. Mountain time) on September 5. Dial-in numbers: 416-640-1907 or 800-732-9303. Callers should dial in 10 minutes prior to the call. A replay of the conference call will be available by phone through September 30, 2007, at 416-640-1917 or 877-289-8525, pass code 21237495 followed by the pound key.
This call will also be Webcast: live via CP's website at www.cpr.ca. To access the Webcast, click on Investors and follow the links. The Webcast will be archived through August 31, 2008.
Note on forward-looking information
This news release contains certain forward-looking statements relating but not limited to the proposed acquisition transaction and our anticipated financial performance. Undue reliance should not be placed on forward-looking information as actual results may differ materially.
By its nature, Canadian Pacific's forward-looking information involves numerous assumptions, inherent risks and uncertainties, including but not limited to the following factors: changes in business strategies; general North American and global economic and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of litigation; labour disputes; risks and liabilities arising from derailments; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions on the financial position of pension plans; and various events that could disrupt operations, including severe weather conditions, security threats and governmental response to them, and technological changes.
There are factors that could cause actual results to differ from those described in the forward-looking statements contained in this news release. These more specific factors are identified and discussed in the Outlook section and elsewhere in this news release with the particular forward-looking statement in question.
Canadian Pacific undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise except as required by law.
About Canadian Pacific
Canadian Pacific, through the ingenuity of its employees located across Canada and in the United States, remains committed to being the safest, most fluid railway in North America. Our people are the key to delivering innovative transportation solutions to our customers and to ensuring the safe operation of our trains through the more than 900 communities where we operate. Our combined ingenuity makes CP a better place to work, rail a better way to ship, and North America a better place to live. Come and visit us at http://www.cpr.ca/ to see how we can put our ingenuity to work for you. Canadian Pacific is proud to be the official rail freight services provider for the Vancouver 2010 Olympic and Paralympic Winter Games.
end
Contacts:
Media Investment Community
Leslie Pidcock Janet Weiss, Assistant Vice-President Investor Relations
Tel.: (403) 319-6878 Tel.: (403) 319-3591
e-mail: leslie_pidcock@cpr.ca e-mail: investor@cpr.ca
nanaimo73 wrote:Quite a few of DME's SD40-2 locomotives are ex CP. Probably some of them are still in CP paint.
So you could patch the patch on the repaint?
Dan
Our community is FREE to join. To participate you must either login or register for an account.