|Posted on October 12, 2014 at 11:45 AM|
The Canadian Pacific Railway is "close to completing a transaction" to sell the former Delaware & Hudson Railway network south of the Capital Region, top officials at CP Rail told analysts last week.
Hunter Harrison, the railroad's CEO, and James Clements, vice president, strategic planning and transportation services, told analysts the company was close to completing a deal during a two-day meeting with analysts in White Plains.
Canadian Pacific would retain the lucrative line that carries Bakken crude from Montreal south to oil terminals at the Port of Albany.
The D&H line runs through Schoharie County, Oneonta and Binghamton and then into Pennsylvania, ending at Sunbury with trackage rights into Philadelphia.
Much of the traffic on the line consists of Norfolk Southern trains, mainly intermodal container trains and auto carriers, which use it to connect to the Pan Am Southern line from Mechanicville to Ayer, Mass., outside Boston. Pan Am Southern is a joint venture of Pan Am Railways, formerly Guilford Transportation, and Norfolk Southern.
Norfolk Southern already owns the so-called Southern Tier route once operated by Conrail that runs east and west through Binghamton.
A spokesman for Norfolk Southern declined to comment on "rumor or speculation" about whether it would acquire the former D&H line.
And Canadian Pacific officials didn't respond to several requests for comment.
But observers say Norfolk Southern would be the logical purchaser, enabling it to improve the line and increase train speeds.
State officials are watching the deal progress.
"We are aware that Canadian Pacific has announced they have an agreement to sell, and we are awaiting further details to evaluate the impact of the transaction in New York state," state Department of Transportation spokesman Beau Duffy said.
Business leaders welcomed the possibility that Norfolk Southern might serve the Capital Region with its own rail connection, instead of depending on trackage rights over competitors' lines to reach shippers here.
"Anything that improves service is significant for us," said David Buicko, chief operating officer of the Galesi Group, which operates industrial parks in the Capital Region.
The U.S. Surface Transportation Board would have to approve the sale of the rail line.
One analyst, Benoit Poirier, of Desjardins Capital Markets in Montreal, said in a note to clients the sale could yield about $200 million Canadian, or 180 million U.S., according to Bloomberg News. He rated the shares buy.
Shares (NYSE: CP) gained 15 cents to close at $214.82 Monday.