On the Effect of GNP Closure on Bangor and Aroostook
BANGOR -- In a presentation to an Action Committee at Husson College in Bangor, Rail World Inc. president, Ed Burkhardt, said that he never expected that he would be dealing with the prolonged closure of the railroad’s biggest customer just hours after he finalized the purchase of the Bangor and Aroostook Railroad.
Burkhardt is also the chairman of Montreal, Maine and Atlantic Railway, the new owners of Bangor and Aroostook Railroad.
Great Northern Paper Company filed for bankruptcy less than 2 hours after Burkhardt completed the $50 million purchase of the railroad on January 9th.
Great Northern accounted for one-third of Montreal, Maine, and Atlantic’s business.
MMA’s vice chairman, Frederic Yocum, said that MM&A may not have purchased BAR if GNP had sought Chapter 11 bankruptcy one day earlier.
MM&A purchased BAR on January 9th. On January 16th, it announced a reduction of employee wages by up to 40% effective the next day, and asked employees to volunteer to be furloughed. 25 employees were laid off.
When it purchased BAR, MM&A expected to invest $20 million on capital improvements but, under current economic conditions, some of these projects have been put on hold.
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