2003 Assets acquired
MMA was formed in October 2002. The railway was 72.8% owned by Rail World ($54.7 million) and 12.8% by Caisse de dépôt et placement du Québec ($7 million) with the remaining minority stakes held by fifteen other private investors.
MMA purchased the assets arising out of the 2002 bankruptcy of the holding company Iron Road Railways. Iron Road Railways owned the following subsidiaries at the time of its bankruptcy:
Closing of the sale by the trustee for Iron Road Railways took place in January 2003 and MMA began operations over 745 mi of track. An average of 25 trains were operating each day and the company employed roughly 350 people at that time.[11] MMA's logo design was based on that of Bangor and Aroostook Railroad.
- Bangor & Aroostook Railroad
- Canadian American Railroad
- Northern Vermont Railroad
- Quebec Southern Railway
- Van Buren Bridge and Construction Company (VBB)[10]
2003-2010 Cost-cutting
Almost immediately after MMA began operations, two of the railway's largest customers, a pair of Great Northern Paper mills in Millinocket and East Millinocket, declared bankruptcy and shut down.[12][13]
MMA responded by reducing its workforce to 275 employees and cut salaries by 40 percent. The decline of the pulp and paper industry as well as the lumber industry, which originally represented 60% of the railway's traffic base, had rendered a company worth $60 million in 2003 effectively worthless. Accountants from the la Caisse de dépôt et placement du Québec wrote that company's investment in MMA down to a nominal $1000 from 2008 onward.[14] MMA laid off additional workers in 2006 and in 2008 as the company struggled to become profitable.
In the spring of 2010, MMA cut train crews from two workers to one, installing remote control and cutting the total workforce to 175 people (down from twice that number in 2006). These steps were estimated to save $4.5 million annually in wages. Later that year, it sold the northern 233 mi of the former BAR line to the state; this track was in very poor condition but its sale brought $20 million, $7 million of which was used to repay a 2003 loan from la Caisse de dépôt et placement du Québec, an MMA stockholder.[14]
2008 Eastern Townships passenger proposal
A 2008 proposal to return passenger train service to the Eastern Townships on the 150 km route between Montréal and Sherbrooke was studied but never implemented. The MMA-owned section of the line from St-Jean-sur-Richelieu to Sherbrooke would have required costly upgrades to tracks and bridges in order handle Via Rail passenger trains operating at 110 km/h.[18]
2011 Twin Rivers Paper dispute
In 2011, the Twin Rivers Paper Company of Madawaska, Maine, the largest customer on the former BAR line, intervened in a United States District Court lawsuit which sought to allow the company to deal directly with Canadian National Railway after years of problems with what it described as "MMA's exorbitant pricing structure, ineffective service, and annoying executives." MMA was charging more to haul rail cars 24 mi from Madawaska, ME to the interchange point with CN at St. Leonard, NB than CN demanded to carry this freight onward to Montreal, Quebec.[19] MMA's service and business practices had been subject to ongoing complaints from Fraser Papers Inc. and its successor Twin Rivers Paper Co. about missed pickup and delivery deadlines as well as poor track maintenance.[20]
Upon failing to break free from MMA's local monopoly through legal action,[21] Twin Rivers Paper Co. resorted to transshipment of its entire output across the Canada–United States border to Edmundston, New Brunswick by truck for placement directly on CN trains.[22]
2010 Northern Maine abandonment
In early February, 2010, the MMA filed a notice of intent with the Surface Transportation Board that it intended to abandon 233 mi of track in northern Maine, between Madawaska and Millinocket, part of the original Bangor & Aroostook Railroad's main line bought by MMA in 2003.[14] Many portions of this track were in such poor condition that freight could only safely run at 10 mph.[22]
Affected lines were located in Penobscot County and Aroostook County, Maine, and included track serving Houlton, Presque Isle, Caribou and Fort Kent. MMA lines between Millinocket and Montreal, Brownville and Searsport, and Madawaska to Van Buren were not included in this application.
According to MMA, losses from operating the lines had reached the point where they were threatening the financial health of the entire railroad.[23] The STB subsequently postponed action on the request in late April, after the railroad and Maine officials agreed to negotiate to prevent the lines from being abandoned, which the state said could negatively affect the economy of the area. State legislators proposed that the state buy the lines and contract out freight rail service, similar to lines in Vermont.[24]
2012 Sainte-Rosalie abandonment
MMA suspended freight service on July 16, 2012 over the Ste Rosalie Subdivision without prior notice to its customers. This 38 km rail line connecting the MMA main line at Farnham, Quebec north to Sainte-Rosalie in the Montérégie region of Québec was inspected in May 2012 by Transport Canada and was deemed to be non-compliant with recently updated "Rules Respecting Track Safety"[32] implemented by Transport Canada. The non-compliance was due to ongoing cost-cutting by MMA which resulted in deferred maintenance to the track between 2002 and 2012. MMA claimed the new "Rules Respecting Track Safety" was a force majeure and sufficient reason to terminate train operations[33] without first complying with Section 140 of the Canada Transportation Act[34] detailing requirements for "Transferring and Discontinuing the Operation of Railway Lines". The CTA legislation states that railway companies must give one year advance notice.[35]
2012 Oil shipments
The MMA had been constantly struggling financially since it was formed in 2002 due to economic problems facing its primary customers in the forestry industry. The forestry industry in Maine and Quebec fared poorly in the Great Recession of 2008-2010 and in 2010, MMA cut its workforce dramatically and sold hundreds of miles of track in northern Maine to control operating costs and manage its debt. The company's fortunes began to change in 2012 when MMA embraced oil-by-rail as a path to profitability. Transporting oil allowed it to re-hire laid-off workers and purchase additional locomotives (rebuilt General Electric C39-8s originally constructed in 1986). The oil being transported over MMA was destined for Saint John, New Brunswick's Irving Oil Refinery.[37] By early 2013, environmental groups and Maine state officials were expressing concern about the increasing amounts of crude oil on both the MMA and its rival Pan Am Railways in the wake of a string of minor derailments on both railroads. According to Maine Department of Environmental Protection director Scott Whittier, "The transportation of crude oil across rail lines is a concern because many times, rail lines are very close to sensitive water bodies, so it does present a potential threat that we need to prepare for."[38]
In a March 2013 Associated Press
2013 Frontenac fuel spill
On June 11, 2013 an MMA locomotive spilled 13000 L of diesel oil from its fuel tank at Frontenac (approximately 5 km east of Lac-Mégantic, Quebec) after the tank was perforated while using a switch.[40][41]
2013 Lac-Mégantic disaster
On July 6, 2013, train MMA 2, which was made up of C30-7 5017, a VB Remote Control Caboose, C30-7 5026, CITX SD40-2 3053, C30-7 5023, CEFX SD40-2 3166, a boxcar being used as a buffer car and 72 DOT-111 cars carrying crude petroleum products derailed in the centre of Lac-Mégantic, Quebec. The runaway train, without anyone at the controls after a stop at Nantes for a crew change, derailed at approximately 1:20 AM, and four of its cars exploded. The city's downtown core suffered catastrophic damage, with many businesses and residential properties completely destroyed. Many of the residents lost their homes or jobs; 47 people are presumed dead in the deadliest Canadian rail disaster since the St-Hilaire train disaster in 1864.[42][43][44] The locomotives separated from the cars before they could derail.
Rail World president and CEO Edward Burkhardt first visited Lac-Mégantic after the accident on 10 July 2013, and was heckled by residents. After the accident the railway's safety record was called into question. The train had been left unattended and improperly secured overnight on the mainline, with one locomotive running, on a -0.92% grade leading 18 km from Nantes, Quebec downhill to a 10 mph curve where the line entered downtown Lac-Mégantic.
2013 Financial difficulties and bankruptcy
Following the tragedy, parent company Rail World faced hundreds of millions of dollars in lawsuits and environmental cleanup costs due to the destruction of downtown Lac-Mégantic.[58] It is unclear how much of the disaster's cost was paid by liability insurance; laid-off MMA workers reported problems obtaining the severance pay owed them[59] and cheques to suppliers were rejected due to non-sufficient funds.[60]
On August 7, 2013, the company filed for bankruptcy protection in both the Quebec Superior Court in Montreal (under the Companies' Creditors Arrangement Act)[47] and the United States Bankruptcy Court in Bangor, Maine[61] (under Chapter 11
2014 sale
MMA's assets were sold at auction to Railroad Acquisition Holdings, LLC, a subsidiary of the Fortress Investment Group, LLC, in January 2014 in an attempt to keep the line open as a going concern.[3][67][80] That group's initial bid for US$14.25 million, placed in December 2013,[4] was the only to offer to buy the entire MMA system. The terms of the sale were announced in mid-February 2014 when the new railroad named Central Maine and Quebec Railway was registered in the United States and Canada. The sale was finalized in March 2014.
A joint bid from J.D. Irving Inc.'s Eastern Maine Railway and Pan-Am's Springfield Terminal Railway offered $8 million for just the Maine portions of the line; the Washington County Railroad offered $750,000 for just the line to Newport.[81]
