IChurchill Inc., halts negotiations to acquire Hudson Bay Railway, Port of Churchill and associated assets

iChurchill Inc. has halted its negotiations to finalize the purchase of the flood-damaged Hudson Bay Railway, the Port of Churchill and associated assets from their current owner, OmniTRAX, due to the Government of Canada’s unwillingness to engage in meaningful dialogue. As a result, iChurchill believes the repairs to the railway are highly unlikely to proceed during the upcoming summer construction season. This is unfortunate, as this Wednesday, May 23, 2017, marks one year since the closure of the railway, and there is still no clear path forward to restore this vital service.

“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, but we have apparently run up against politics,” said iChurchill CEO, Louis Dufresne. “We finally met last week with the Government of Canada’s negotiator on the file, Mr. Wayne Wouters, and he made it clear that the government is willing to deal only with one specific company, a Toronto-based financial firm. We can’t understand why this is, given that our partnership meets all of the government’s stated criteria to support the restoration of rail service to Churchill.”

Of the organizations publicly understood to be interested in acquiring these assets, iChurchill is well placed to undertake the repairs to the flood-damaged rail line during the summer of 2018, and to restore rail service as quickly as possible. Having previously agreed to terms with OmniTRAX in March 2018, iChurchill has progressed the due diligence, legal agreements and financial work required to acquire a complex set of assets and to restore a business that has struggled for profitability in recent years. In order to be in a position to complete the repairs this season, iChurchill has incurred costs directly associated with initiating the repair process, even though the work cannot begin until the assets have legally changed hands.

iChurchill is concerned that the federal government appears set on working with only one specific company on this file. Statements 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 the financial firm at this time. The government appears to be picking sides in a commercial transaction regarding privately-held assets.

After iChurchill signed a letter of intent with OmniTRAX in March 2018, OmniTRAX notified the government’s negotiator that they had come to terms with a prospective buyer of the assets. However, Mr. Wouters informed OmniTRAX that the government was pressing ahead with another firm; he indicated no interest in meeting with the successful bidder, iChurchill.

When Natural Resources Canada announced Mr. Wouters’ appointment on September 8, 2017, they listed three conditions for the Government of Canada to “act quickly” to provide support to a new owner of the assets. Those conditions are: a reasonable price for transfer of the assets; support from First Nations; and a viable business plan to operate the rail line safely and cost-effectively. An ownership consortium including iChurchill and a group of northern Manitoba First Nations meets those conditions. The consortium’s proposal includes a majority ownership stake for the First Nations. Even so, Mr. Wouters was dismissive in the only meeting he has granted to the consortium, thereby obstructing a potentially historic partnership opportunity.

Mr. Dufresne concluded, “Our team believes that these assets can be operated profitably. My head cares about the commercial interests. But my heart is with the people of Churchill and the First Nations of northern Manitoba. It’s been a year since a flood washed out their only land link to the rest of the country. I hope they can get their railway back on-line this year, but without a change in position on the part of the federal government, I’m not optimistic.”

iChurchill is a Canadian company focused on the acquisition and commercial operations of the Hudson Bay Railway, Port of Churchill and associated assets.

SOURCE iChurchill Inc.

War Lake First Nation Chief Betsy Kennedy, said, “These assets are crucial to the existence to all Northern First Nations. My community is directly impacted as this line goes directly through our community and territory.  This is a historic day as finally we will have a say in our future.”

Chief Glenn Hudson, leading member of the First Nations consortium, said, “I stand together with my Northern Colleagues to welcome in a new day in Manitoba.  A day that shows Canada the strength of First Nations, that shows how true partnerships are formed and ensures that together, the First Nations will build a Stronger North, a Stronger Manitoba and a Stronger Canada.  This is a true opportunity for all levels of Government to put Reconciliation into action.”

The consortium and iChurchill plan on posting requests for proposals (RFPs) for the repairs in the coming days.  This will ensure repairs to the railway, which was damaged by flooding in May 2017, can commence promptly and that rail services to Churchill can be restored as soon as possible.

“We are proud to have formed this historic partnership and are excited to be working together with the First Nations to restore rail service to Churchill and build a successful business that protects the sustainability of these vital assets well into the future.” Said Louis Dufresne, President of iChurchill.

The corporate process is anticipated to conclude in mid-June 2018; and this will ensure repairs are well underway in advance of the fall/winter season.

SOURCE iChurchill Inc.