Government of Canada announces support for acquisition and repair of Churchill rail line by Arctic Gateway Group

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Railway at Port of Churchill, Manitoba

WINNIPEG, MB. Sept. 14, 2018
Today, the Honourable Jim Carr, Minister of International Trade Diversification, on behalf of the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development and Minister responsible for Western Economic Diversification Canada, announced an investment of $117 million to the Arctic Gateway Group through the Western Diversification Program.  It allows this historic private-public partnership that blends First Nations and community ownership and Canadian private sector leadership, to take over ownership of the Hudson Bay Rail Company, the Hudson Bay Port Company and the Churchill Marine Tank Farm.

The Government is making good on its commitment to restore this critical railway line to Churchill and surrounding communities. It will create opportunities for economic prosperity in the region for years to come and for residents to once again connect with friends and family, grow businesses, and create good middle class jobs.  Already, the Group has begun the much-needed restoration of the Hudson Bay Railway Line.  The line is expected to grow into a key transportation and export hub.  The Arctic Gateway Group has brought forward a viable business plan with a view to expand Canada’s reach to international markets.

Given the Government’s commitment to a renewed relationship with Indigenous peoples, this partnership represents another step forward towards the equal and inclusive participation of Indigenous peoples in Canada, having a direct stake in the operation of the companies upon which they rely.

The Government of Canada would like to thank those involved, including our Chief Negotiator, the Honorable Wayne Wouters, and the team at McCarthy Tétrault for their efforts in reaching a successful outcome.

“Today’s announcement is about investing in the future of our economy and Indigenous peoples in Canada.  With this funding, Arctic Gateway Group will provide security and economic prosperity to northern Manitobans and demonstrate the art of the possible when we work together to build a prosperous Canada.”
– The Rt. Hon. Justin Trudeau, Prime Minister of Canada

“We committed to find a solution to restore the Hudson Bay Rail line and we delivered.  I am happy to say that repairs have begun and all efforts will be made to restore service before winter freeze up.  This collaboration has historic significance and we are excited to see the success the future will bring.” – The Honourable Jim Carr, Minister of International Trade Diversification

“We know that quality infrastructure is necessary to unleashing the economic potential of a region. The Hudson Bay Railway Line is not only a vital mainland connection for the town of Churchill and surrounding communities, it represents an important transportation and commercial hub for economic prosperity in the region.  This is part of laying the foundation for good jobs and growth in Western Canada.”
– The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development

New Owners for Hudson Bay Rail Line

The Hudson Bay Rail line is a critical piece of transportation infrastructure for nearly 30,000 people from First Nations, other communities along the line, and the Kivalliq region of Nunavut. It brings security for food, fuel, jobs and the economy. A safe and reliable rail line also provides certainty for industry and supply lines to grow and prosper over the long term.

On August 31, 2018, Arctic Gateway Group Limited Partnership and OmniTRAX Inc. signed a Share Purchase Agreement to take over ownership of the Hudson Bay Rail Company, the Hudson Bay Port Company and the Churchill Marine Tank Farm. The Government of Canada intends to make good on its commitment to northern Manitoba residents to restore rail service.

Repairs to the rail line have begun.  Crews are working seven days a week, from sunrise to sunset, making best efforts to restore the rail service before winter 2018. Throughout this process, supports for food, fuel and economic support will remain in place until the rail line is operational.

The Buying Group
Arctic Gateway Group Limited Partnership, comprised of Missinippi Rail Limited Partnership and Fairfax Financial Holdings & AGT Limited Partnership, represents a strong and well-balanced buying group. The consortium brings together First Nations and community ownership and support, along with significant private sector leadership and global investment capacity, and collectively, substantial short line rail operating and shipping experience.

Missinippi Rail Limited Partnership includes community support and ownership stakes from First Nations and non-First Nations communities in Manitoba with potential for Kivalliq communities in Nunavut.

Fairfax Financial Holdings and AGT Food and Ingredients make up the other half of the partnership and bring private sector leadership and experience to the buying group. Fairfax Financial Holdings is one of the pre-eminent investment companies in Canada and AGT Food and Ingredients, headquartered in Regina, is a major supplier of pulses, staple foods, and food ingredients in the world.

This historic collaboration represents a progressive approach toward redefining relationships with First Nations and Inuit people in Canada. It represents an understanding of the significance of the rail line and its importance in the lives of the people in northern Manitoba.

Government of Canada Funding
Government of Canada investment of $117 million is provided through the Western Diversification Program of Western Economic Diversification Canada.

Acquisition and Repair of the Bay Line and Port Terminal Assets $ 74 million
(Funding is over 3 years – 2018 – 2019 to 2020 – 2021)
Operations and enhancing the commercial viability of the
Bay Line, Port Terminal Assets and Tank Farm $ 43 million
(Funding is over 10 years – 2018 – 2019 to 2027 – 2028)
The Government of Canada is also providing a $10 million repayable contribution, due 150 days after the closing date, providing time for the Arctic Gateway Group to secure their own loan on commercial terms.

Notably, under the terms of the arrangement, Arctic Gateway Group will not be providing dividends for at least 10 years. Therefore, the shareholders have no immediate returns on equity and intend to reinvest into the companies and northern Manitoba.