CN enters exclusive negotiations to acquire provincially-owned ONRail

by Canadian Shipper

The Ontario government has directed the Ontario Northland Transportation Commission (ONTC) to negotiate the sale of ONTC’s ONRail unit exclusively with CN.

Keith L. Heller, senior vice-president of CN’s Eastern Canada division, said CN’s acquisition plan for the provincially-owned railway "offers the best employment opportunities to ONRail employees, the best promise of improved service for Northeastern Ontario rail shippers and passengers, and the best prospects for future economic growth in the North."

Claude Mongeau, CN’s executive vice-president and chief financial officer, said CN aims to reach a definitive purchase agreement with the Ontario government by yearend, with the closing expected in the first quarter of 2003.
ONRail, a unit of ONTC, an agency of the Ontario government, operates rail freight and passenger services over a 700-mile rail network serving Northeastern Ontario and Northwestern Quebec. Its primary connection with CN is at North Bay, Ont., approximately 200 miles north of Toronto.

CN said its offer for ONRail best meets the ONTC’s service improvement plan objectives. CN plans to improve freight and passenger services, including the Little Bear service to Moosonee, and inject new capital into ONRail.

CN said a definitive agreement for its ONRail acquisition is subject to completing negotiations with ONTC, reaching a labour agreement with ONRail’s unionized workers and securing the approval of the Ontario government cabinet. Specific terms of CN’s offer are confidential, pending a final agreement.

Heller said Northeastern Ontario shippers would benefit from CN’s purchase.

"Our scheduled freight service and network reach would offer ONRail shippers better service and the most direct route to key North American markets.

"In addition, CN has a strong forest products franchise and large, broad-based metals and minerals and petroleum and chemicals businesses key strengths for Northeastern Ontario resources companies seeking to penetrate new North American markets. "

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