CP Rail to take C$180 mln charge on Powder River Basin option

Mon Dec 3, 2012 8:22am EST

Dec 3 (Reuters) - Canadian Pacific Railway said it will take a pre-tax non-cash charge of about C$180 million ($181.2 million) in the fourth quarter on an option to extend its network to carry coal from the Powder River Basin in northeastern Wyoming and southeastern Montana.

Canada's second-biggest railway said it plans to indefinitely defer the extension due to weakness in the thermal coal market.

CP acquired the option to build a 260-mile extension of its network into coal mines in the Powder River Basin when it bought Dakota Minnesota and Eastern railroad in 2007.

The purchase gave CP access to lucrative markets in the booming U.S. Midwest but it came at a steep price.

The company said on Monday components of the charge include the option, engineering design costs, land and capitalized interest.

Shares of the Calgary, Alberta-based company closed at C$92.70 on the Toronto Stock Exchange on Friday.

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