REGINA – CN Rail will almost certainly not end up among Sask-atchewan Wheat Pool’s holdings, says the company official who studied the idea.
“The bottom line is that unless there appears to be a situation where we would have a monopoly railway situation, we’re not likely to go ahead with this further,” said director of corporate development Robert Virgo, about buying out the railway company.
CN is being privatized this autumn. Pool delegates instructed the company’s board of directors at the 1994 general meeting to analyze whether buying the railway would be a good idea.
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Virgo said many factors make CN a bad buy for the pool. CN has a huge debt load; its expenses swallow too much of its revenues and it has significant labor problems.
Even if the pool wanted to buy the company, overall cost of $3.5 to $4 billion is too high for the grain company to handle.
“You would have to find 100,000 farmers with $40,000 each to get at it,” he said.
While a number of western organizations have considered forming a consortium to buy CN, Virgo said the federal government has been clear about its desire that CN be a widely held public company.
Since any one shareholder would only be allowed to own a maximum of 15 percent of CN shares, buying into the company would not help the pool much, he said.
While the pool has not shelved the idea of somehow getting involved in CN, “the main point as far as we are concerned is we want a competitive railway system.” Since there are two railways competing now, it wouldn’t make sense for the pool to get involved, he said.
