Failed railway bid leads to questions about transfer process

There may still be a deal in the works to sell the Hudson Bay Railway (HBR) and the Port of Churchill, but it probably won’t involve Calgary-based iChurchill, a company that appeared to have an inside track on acquiring the assets just a few weeks ago.

Louis Dufresne, chief executive officer at iChurchill, said his company’s efforts to purchase the northern Manitoba facilities have been derailed due to what he called “Ottawa’s unwillingness to engage in meaningful dialogue.”

“We are disappointed to have put so much time, effort and money into what would have been a timely solution for the people of Churchill and the economy of western Canada,” Dufresne said.

“We have apparently run up against politics.”

Earlier this month, iChurchill officials announced that they had signed a letter of intent to acquire HBR and the Port of Churchill from OmniTrax, the current owner.

At the time, Dufresne said a deal was close to being finalized.

A formal announcement involving iChurchill and a consortium of Manitoba First Nations was to be made within days.

But in a May 23 interview with the Western Producer, Dufresne said iChurchill’s efforts have been halted because federal negotiators have thrown their support behind another bid involving Toronto-based financial firm Fairfax Financial Holdings Ltd.

Dufresne and another iChurchill official recently met with Ottawa’s appointed negotiator on the file, Wayne Wouters.

According to Dufresne, Wouters indicated that another deal was already in the works and that Ottawa would not be supporting iChurchill’s bid.

“The government is willing to deal only with one specific company…” Dufresne said.

“We can’t understand why this is, given that our (iChurchill’s) partnership meets all of the government’s stated criteria to support the restoration of rail service to Churchill.”

Dufresne said Ottawa’s position raises questions about the process being used to identify a new owner for the railway.

Specifically, is the process a competitive one in which all interested parties are given equal consideration?

Or does the government’s appointed negotiator have the authority to identify a new owner at his discretion, without considering competing bids?

“iChurchill is concerned that the federal government appears set on working with only one specific company on this file,” Dufresne said.

“Statements (made) by the government’s representative in a recent meeting were reasonably understood by iChurchill to imply that the Government of Canada would make a financial contribution to repairing the railway, but that such a contribution is only available to (Fairfax Financial) at this time.”

Dufresne said Ottawa “appears to be picking sides in a commercial transaction regarding privately-held assets.”

The dispute between iChurchill and Ottawa is the latest development in an ongoing saga that has so far defied a solution.

A section of the Hudson Bay Railway that spans more than 200 kilometres between Gillam, Man., and Churchill has been inoperable for more than a year after overland flooding caused extensive damage to sections of the track and railbed.

OmniTrax Canada, the owner of the railway and the port, announced in early 2017 that it would not pay for reparations and would instead begin a process aimed at selling the disabled railway to a new owner, along with port facilities.

Last September, Ottawa said it was “deeply concerned” that OmniTrax had not commenced repairs to the railway — the only overland route connecting several northern Manitoba communities with the rest of Canada.

Under a 2008 agreement, Ottawa committed to providing financial support to the Hudson Bay Railway Company in exchange for a pledge by OmniTrax to repair, maintain and operate the rail service through to Churchill until 2029.

Ottawa later indicated that if OmniTrax failed to live up to its contractual obligations, the government would initiate discussions aimed at transferring the assets to a new owner.

“Given the urgency, Canada is willing to explore any other options, including interim funding to enable restoration of rail service,” Ottawa said in a September 2017 news release.

“Canada is furthering its committment by appointing … Wayne Wouters … as the government’s chief negotiator ….”

The chief negotiator “will play a key role in the ongoing discussions with OmniTrax Inc., interested buyers, community leaders and the Province of Manitoba,” the federal news release stated.

Wouters, who hails from Edam, Sask., held a variety of senior positions in the federal public service and served as clerk of the privy council and secretary to the federal cabinet under Conservative Prime Minister Stephen Harper between July 2009 and October 2014.

After retiring from the public service, he was appointed an officer of the Order of Canada in 2017.

Western Producer attempts to reach Wouters last week were unsuccessful.

Sources familiar with the negotiation process say the pending HBR deal with Fairfax Financial may also involve AGT Foods, a Regina-based pulse crop processor and exporter managed by president and chief executive officer Murad Al Katib.

Al Katib was not available for comment last week.

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