CN purchase of EJ&E announced

[MSchwiebert]

http://www.bloomberg.com/apps/news?pid= ... fer=canada

Canadian National to Buy Rail Line From U.S. Steel (Update1)

By Peter Young

Sept. 26 (Bloomberg) -- Canadian National Railway Co. agreed to buy most of the Elgin, Joliet & Eastern Railway Co. from U.S. Steel Corp. for $300 million to expand access to the Chicago-area steel industry.

U.S. Steel will retain a portion of the railroad supporting the company's Gary Works in northwest Indiana and rename it the Gary Railway, the companies said in a joint statement today distributed by Marketwire.

Today's agreement gives Canadian National, Canada's largest railroad, access to customers including Mittal Steel and Sun Steel Co., BP Amoco, Akzo Nobel Chemicals, and electric utilities, according to the EJ&E Web site.

The acquisition ``will bridge what has been the missing link to connect the eastern, western and southern regions of CN's network,'' Senior Vice President Gordon Trafton said in the statement.

Canadian National plans to invest about $100 million for integration, new connections and infrastructure improvements to add capacity on the EJ&E line, the company said in the statement.

[GLC 392]

im glad in a way b/c i will see some of the EJ&E units in Durand but, like the other railroads CN has bought the older units dont last long, so how long will the EJ&E SD-m's and SD38's last, my guess not long.

[trainjunkie47]

It would be neat to see one of the J units used as yard power somewhere around here.

[Jeff L]

Canadian National purchases the EJ&E. Canadian Pacific purchases the DM&E/IC&E. Would be surprising if Ferromex purchases the KCS/TFM in the future. If they did, they better learn the English language.

[sd70accsxt700]

Jeff where in the world would you get the idea that FXE would buy the KCS? Good god people its nice to speculate what would happen, or dream, but FXE couldent even pay for there new GEVOS, (hence thats why they have been all over the county, on lease), so what makes you think that they have the money to buy another ralroad. Bye the way what do you think TFM is a Canadian company?

[GreatLakesRailfan]

Canadian National purchases the EJ&E. Canadian Pacific purchases the DM&E/IC&E. Would be surprising if Ferromex purchases the KCS/TFM in the future. If they did, they better learn the English language.

At one point KCS was supposed to buy TFM outright, but evidently those in charge of TFM (a Mexican company) changed their minds or something (might've had something to do with the Mexican government). I don't think we'll see TFM buy out KCS, much less FXE buy out either one let alone both.

[cnw8835]

Canadian National purchases the EJ&E. Canadian Pacific purchases the DM&E/IC&E. Would be surprising if Ferromex purchases the KCS/TFM in the future. If they did, they better learn the English language.

At one point KCS was supposed to buy TFM outright, but evidently those in charge of TFM (a Mexican company) changed their minds or something (might've had something to do with the Mexican government). I don't think we'll see TFM buy out KCS, much less FXE buy out either one let alone both.

KCS does own what was TFM. TFM is actually Kansas City Southern De Mexico now (KCSM). Union Pacific is a significant owner in Ferromex also, something like 30%.
As for CN buying the EJ&E, bummer.

[Scooterb]

Sept. 27 news from RAILWAY TRACK & STRUCTURES Magazine:

Gary, Ind., to become international rail hub

Gary, Ind., will become one of two major U.S. hubs in Canadian National Railway's system under the railroad's plan to purchase the EJ&E Railway, according to local newspapers. Canadian National CEO E. Hunter Harrison on Wednesday said Kirk Yard south of U.S. Steel Gary Works is a "critical part" of the railroad's proposed $300 million purchase of the EJ&E, which could cut train waits in Chicago by as much as a day.

Kirk Yard will be upgraded and that will "free up capacity, land and real estate to expand our intermodal operations and projects for CN Worldwide," Harrison said.

The announcement and Harrison's emphasis on Kirk Yard appears to give Gary a leg-up in the region's race to land a major intermodal rail operation. LaPorte County officials are actively courting CSX Corp. and Norfolk Southern Corp. for planned intermodal yards, and Hammond officials would like to site one at Gibson Yards.

The railroad will invest $100 million for new connections and infrastructure, the company said. CN will no longer use the Indiana Harbor Belt Railway once the deal is complete.

The main EJ&E line from Waukegan enters Indiana just east of Chicago Heights and passes through Griffith before heading north to Kirk Yard. Another line heads from there directly into Chicago by way of East Chicago and Whiting.

The EJ&E will continue to serve current industrial customers, Harrison said. Those include Mittal Steel Corp. and others.

[trainjunkie47]

The map of the combined system from CN's website.
http://www.cn.ca/about/media/media_upda ... map_en.pdf

Note the new Gary Railway. This is current J trackage that will still be operated by United States Steel. The media release also mentions there are no 2-1 customers on the entire combined system, so no competition issue arises there.

[Railnut]

Most of the Ferromex units have been on UP until recently, helping pay themself off since the FXE couldn't pay for them. UP would merge the FXE if they could.
The EJE's SD-M's (exDMIR) are now on the short list to visit the deadline at Woodcrest, I suspect the SD38's (not the SD38-2's) will be leaving soon as well.
Dave C

[EJ&ESDM809]

Doh, that means CN has bought 3 out my 4 favorite railways since 2001. EJ&E is my favorite of them. I live a couple of minutes away from the EJ&E and head over to see their trains frequently. Looks like I have a parade of widecabs to look forward to in the future, great... I am so not looking forward to this. As for the SD38-2s, I think they will be around for a while, as most of them are technically SD38-3s, but EJ&E still calls them -2s. The two straight SD38s probably will be on the CN for a little bit, but probably not as long as the -2s/3s. CN seems to like -3 engines so those should be around for a few years. I am not even sure if the SDMs are included in the takeover. Sounds like USS is giving them the SD38-2s/SD38s, 4 switch engines, and the 703, but I haven't heard anything about the SDMs going to CN or going to the new Gary Railroad, so we will have to wait and see. Maybe USS would keep them and transfer them to other transtar railroads This means CN now will own the 3 major former USS roads, EJ&E, DM&IR, and the B&LE. Who would've ever thought that would happen 10 years ago. CN seems to like playing monopoly with small railroads and they win every time.

[hobojim]

Canadian National purchases the EJ&E. Canadian Pacific purchases the DM&E/IC&E. Would be surprising if Ferromex purchases the KCS/TFM in the future. If they did, they better learn the English language.

If ferromex bought KCS they would make us push '2' to talk in English.

[EJ&ESDM809]

The towns along the EJ&E are already strongly opposing the deal. The towns do not want more freight traffic going through, plus this deal could put the proposed Metra STAR line (which would run from Joliet to O' Hare airport) which would use the the EJ&E for the majority of the trip in jeopardy. Plainfield and Barrington are among the towns opposing the deal. Plainfield is already complaining to the EJ&E about what goes through there now and the noise the trains make. Plainfield has even acquired property to build two Metra stations. I can't imagine what could happen if more traffic is added to the line CN is jumping into a big mess as I'm sure other towns are going to complain about noise and traffic tie ups, along with the STAR line. Sounds like UP and BNSF are both opposed to the deal due to their trains getting delayed at points where their lines cross the EJ&E, and the possible loss of connections. BNSF currently uses the line to access the Logistics Park intermodal facility neat Elwood and uses the line from Eola to Joliet to connect the ex-BN and ex-ATSF lines. UP uses the line to access several power plants in the Joliet area, along with some in Indiana.

[AARR]

Nobody wants railroads in their towns anymore (except railfans . Railroads know how to handle these things...most of the time.

[penn central]

I don't see a problem here i think CN will upgrade the line for more capacity and it shoudn't affect METRA if they do that.

[trainjunkie47]

I'm certain CN will work out deals with UP and BNSF. This sort of carping always happens in any aquisition like this. Once CN greases the wheels a little bit, UP and BNSF will quiet down and the STB will approve the deal. I can't see Barrington and Plainfield being able to do much to get in CN's way. They really have next to zero legal standing in the matter.

[cnw8835]

CN files application with STB to acquire EJ&E

WASHINGTON - CN on Tuesday filed it application with the federal Surface Transportation Board seeking regulatory approval to buy the Elgin, Joliet & Eastern Railway. CN and United States Steel Corp., announced Sept. 26 an agreement under which CN will acquire most of the EJ&E for $300 million, subject to STB approval. The railroad operations to be acquired by CN will become the EJ&E West Company (EJ&EW). CN is asking the STB to consider its EJ&EW acquisition as a minor transaction, which would permit it to assume control of the EJ&EW in mid-2008. Upon STB approval, EJ&EW would assume the EJ&E name and reporting marks.

The EJ&E would provide the missing link to connect CN's five existing lines entering Chicago, filling a void in its network that has caused delays and higher costs. The railroad said in its STB filing that the transaction would reduce rail-traffic congestion in Chicago's inner core and increase capacity for carriers operating in the city by dispersing CN trains along the EJ&E arc on the periphery of the Chicago metropolitan area. CN plans to spend approximately $100 million to upgrade the EJ&E's infrastructure.

The transaction would make it possible for the city of Chicago to realize its goal to have trains vacate CN's St. Charles Air Line more quickly than under the Chicago Region Environmental and Transportation Efficiency Program Central Corridor scenario. CN is now engaged in preliminary discussions with communities on the EJ&E that would see increased rail traffic as a result of the transaction to find ways of addressing their specific concerns.

[EJ&ESDM809]

Well, the deal has been ruled "minor" by the STB, but has warrented a environmental inpact study (EIS). According to the STB, the EIS process can take anywhere from 18 months to several years. This is mainly due to all the complaints by Barrington and Frankfort. Also, if you look on the STB's website, it appears BNSF is now going against the merger also due to concerns about their trackage rights on the EJ&E. CN has said they will honor the trackage rights, but what is said could and probably will be different then what is actually done. I'm surprized that UP hasn't had anything to say about this yet. This is good news to anyone out there because it gives people more time to get photos while they can of EJ&E power. We all know what CN did to the WC SD45s, and what they are doing now with DM&IR power, so if you want your photos of EJ&E power, especially older engines such as SD38s, SDMs, and the lone SD18s. I still think that at least the SD38-2s that were rebuilt and upgraded to -3 standards should stay for at least a few years, because CN owns a SD35, WC 2500, that is technically -3 standards.