CORRECTED-UPDATE 1-CP Railway seeks options, partnership for portion of DM&E

Tue Dec 4, 2012 12:30pm EST

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(Corrects starting point of line to Tracy, Minnesota in third
paragraph)
    * Notice comes one day after CP shelves DM&E extension
    * CP acquired DM&E for C$1.48 bln under previous CEO
    * CP will lay out turnaround plan in New York Thursday

    TORONTO, Dec 4 (Reuters) - Canadian Pacific Railway,
Canada's second-biggest rail carrier, said on Tuesday it is
exploring options, including partnerships, for a 660-mile
western portion of its Dakota, Minnesota & Eastern Railroad
track.
    CP, which will lay out a corporate turnaround plan to
investors in New York on Wednesday, made the announcement one
day after shelving plans to extend the DM&E railroad into the
Power River Basin coal-mining region, blaming a weak market for
thermal coal.
    The western portion of the line, which runs from Tracy,
Minnesota, west into South Dakota, Nebraska and Wyoming, serves
a number of grain, ethanol, clay and merchandise customers in
the area, CP said.
    "This portion of the CP network would be an attractive and
highly viable opportunity for a low-cost operator," Chief
Executive Hunter Harrison said in a statement.
    "CP has successfully built many partnerships with shortline
and Class 1 railroads throughout its system and we look forward
to assessing the ways interested parties could work together
with us to deliver quality service to customers on the west end
of the DM&E through an innovative partnership." 
    Harrison, the hand-picked choice of CP's biggest
shareholder, William Ackman's Pershing Square Capital
Management, was appointed after a bruising proxy battle this
year that unseated the former CEO and chairman.
    Harrison is expected to tell investors on Wednesday that he
is cutting 5-10 percent of staff, will close rail classification
hump yards, and move the company's headquarters in Calgary,
Alberta.

 (Reporting By Susan Taylor; Editing by Sofina Mirza-Reid)
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