CN expects to report an after-tax gain of approximately $35 million in Q3 2011 from IC RailMarine Terminal Company sale
MONTREAL, Aug. 2, 2011 /PRNewswire/ - As announced previously, CN (TSX: CNR) (NYSE: CNI) reached a definitive agreement to sell substantially all of the assets of IC RailMarine Terminal Company (ICRMT), located on the east bank of the Mississippi River at Convent, La., to Raven Energy, LLC, an affiliate of Foresight Energy, LLC ("Foresight") and the Cline Group ("Cline"), for a cash consideration of US$73 million at closing. Following receipt of regulatory approvals, the transaction has closed and Cline assumed operation of the Convent transfer facility as of August 1, 2011. CN expects to report an after-tax gain of approximately $35 million ($0.08 per diluted share) in the third quarter of 2011 from this transaction.
As part of this sale agreement, CN has also entered into a 10-year rail transportation agreement with Savatran LLC, another affiliate of Foresight and Cline, to haul coal from four Illinois mines to the Convent transfer facility. Savatran will ship a minimum volume of coal via CN growing to 8 million tons per year as of 2014.
"We are excited that we have successfully concluded this transaction," said Michael Beyer, Foresight CEO. "The acquisition of the terminal and the long term transportation partnership with CN firms up our logistics for our growing export business and provides a platform for us to immediately expand our export volumes."
Claude Mongeau, president and chief executive officer of CN, said: "This partnership with Cline is one of the key elements of our strategy to leverage and expand our unique export coal franchise across North America."
CN directly serves five export coal terminals in Canada and the United States, and moved 21 million tons of petroleum coke, thermal and metallurgical coal destined for offshore markets in 2010.
Mongeau said: "With this partnership and the significant coal mine and terminal expansions already announced or planned along our rail network in Western Canada, we hope to double our coal export volume over the next four years if trends of increasing global demand continue."
Certain information included in this news release are "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. CN cautions that, by their nature, these forward-looking statements involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such statements.
Important risk factors that could affect the forward-looking statements include, but are not limited to, the effects of general economic and business conditions, industry competition, inflation, currency and interest rate fluctuations, changes in fuel prices, legislative and/or regulatory developments, compliance with environmental laws and regulations, actions by regulators, various events which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, labor negotiations and disruptions, environmental claims, uncertainties of investigations, proceedings or other types of claims and litigation, risks and liabilities arising from derailments, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to "Management's Discussion and Analysis" in CN's annual and interim reports, Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN's website, for a summary of major risks.
CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related maters, or any other forward-looking statement.
CN - Canadian National Railway Company and its operating railway subsidiaries - spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America. For more information on CN, visit the company's website at www.cn.ca.