Purchase deal for Churchill rail line has 'fallen apart': Omnitrax

An anticipated purchase deal for the Hudson Bay Railway line from The Pas., Man., to Churchill appears to have broken down.

"Over the past several months we have been working with the consortium to finalize the sale of the HBR. Despite our best efforts to find common ground on certain key issues, it now appears that this transaction has fallen apart and that a sale of the HBR to this group may not be possible," said a news release from Omnitrax, which currently owns the rail and port.

"This outcome is unexpected and very unfortunate. We offer our apologies to all those who depend on the line."

The Denver-based company bought the Hudson Bay line along with the port of Churchill in 1997. It has been attempting to sell it since May 2017 when it was heavily damaged and rendered unusable by severe flooding.

A tentative deal was in the works with a consortium that includes two groups representing northern communities and First Nations — One North and Missinippi Rail LP, operating together as Missinippi Rail Partners — along with Fairfax Financial Holdings and AGT Food and Ingredients.

That was announced at the end of May but both sides said there remained a number of legal issues to be resolved before the sale — which would leave the new owners with the responsibility for repairs — was finalized.

Omnitrax didn't say in its release on Tuesday why the deal collapsed, but says it remains determined to sell the property.

"We will continue to pursue any and all opportunities to sell the HBR and related assets, and we will look to do so as expeditiously as possible," the release said.

"We initiated the repair process last week by issuing an RFP [request for proposals] through our engineering firm AECOM. However, we want to make clear that this development may jeopardize the opening of the rail line this season.

"As we have previously stated, we are not in a position to fund the entirety of the repairs to the HBR in the absence of a sale agreement."

The release also offered thanks to Fairfax Financial and Grand Chief Arlen Dumas of the Assembly of Manitoba Chiefs "for their good faith efforts to get a deal done."

A request for an interview with Omnitrax officials was declined.

The potential buyers, One North, declined an interview and sent a written statement. 

"Our buying group is united. We remain at the table and we fully support the efforts to conclude a reasonable deal," said Churchill Mayor Michael Spence and Opaskwayak Cree Nation Onekanew (Chief) Christian Sinclair, co-chairs of One North. 

'We are not going to make it'

That was cold comfort for Rhoda de Meulles, who owns the local hardware store with her husband and can't afford to keep flying in supplies.

"We are not going to make it," she said.

"This town can't do it," Dale de Meulles added.

Natural Resources Minister Jim Carr, who was in Churchill on Tuesday, declined an interview request, but his office issued a statement saying Canada will find a solution.

"This situation has had significant impacts to the town of Churchill and the communities along the line," the statement said.

Repairs to the railway must start within two weeks if they are to be completed before winter, Dale de Meulles said. Without the rail, they will have to order a year's worth of supplies to be brought in by a cargo ship from Quebec.

It has meant costs for packaging and shipping are completely unsustainable, they said. But locking the door for good will be the very last option.

"Our life is Churchill," he said.

"To us, it's one day at a time and that's how we operate now, one day at a time," his wife said. "We see what happens from there."

A number of other potential suitors for the rail line have surfaced in the past year, but a deal remains elusive, while residents in Churchill continue to suffer economically.

The price of goods has soared to cover the expense of flying them in, while tourism and the related income has plummeted in the town of 900, located 1,000 kilometres north of Winnipeg.

Ever since the rail line was flooded out there have been squabbles over who is responsible for the repairs, with Omnitrax rejecting demands from the federal government to fix it.

In June, the Canadian Transportation Agency ruled Omnitrax should have taken reasonable steps to repair the line by November 2017 —  the timeline first proposed by the engineering company, AECOM, that Omnitrax hired to assess the flood damage.

The federal regulator has ordered Omnitrax to begin repairs by July 3 and file monthly progress reports beginning in August until the work is complete.

Omnitrax has signaled its intention to appeal the federal order. That appeal will be heard by a federal court, which could order the company to fix the line and pay financial damages to Churchill.