RailAmerica, Inc.'s RaiLink Canada Ltd. has reached agreement with Canadian Pacific Railway (CP) to terminate early its lease of the Ottawa Valley Railway (OVR) line. Under terms of the agreement, RailAmerica received C$73 million in gross proceeds and the company expects net cash proceeds after taxes and transaction-related expenses of C$69 to C$70 million.
The RailAmerica subsidiary will terminate its lease of the CP-owned OVR rail line between Smiths Falls and Camspur once all remaining cars are cleared from the line. Under the Canada Transportation Act, CP has 60 days to decide if train service will be restored on the line. RailAmerica's subsidiary will continue to maintain and operate the CP-owned rail lines between Sudbury and Mattawa, Mattawa and Temiscaming, and Mattawa and Camspur until dates in 2010 to be determined by CP.
The OVR operation consists of 342 main line miles of track that primarily transport bridge traffic, chemicals, and pulp and paper products. For the nine months ended Sept. 30, 2009, OVR's total revenue was C$13.3 million.
Short line operator RailAmerica owns a family of railroads that operate about 7,400 miles of track in 27 U.S. states and three Canadian provinces.