Toronto investment firm gets on board with Churchill port, northern rail purchase
CBC News has learned that Toronto-based investment company Fairfax Financial Holdings will partner with two Manitoba ownership groups to attempt a purchase of Omnitrax's assets in the province.
Denver-based Omnitrax owns the flood-damaged rail line to Churchill, Man., and the port in the Hudson Bay community, about 1,000 kilometres north of Winnipeg. A section of the rail line — the only ground transportation available to Churchill — has been shut down since May, after being damaged earlier this year by severe spring flooding.
Sources with knowledge of the deal told CBC the federal government and its negotiator, former clerk of the Privy Council Wayne Wouters, have structured a deal with a consortium of two potential ownership groups — One North and Missinippi Rail LP. This was later confirmed by the federal government.
"This development has the potential to contribute to an arrangement supported by First Nations and communities in northern Manitoba," Natural Resources Minister Jim Carr said in a statement released Thursday.
"This would enable a sustainable business approach that results in a safe and reliable rail line."
In the same release Paul Rivett, president of Fairfax Financial Holdings, said "we are optimistic about the prospects of northern gateways."
"The Churchill rail corridor and the Port of Churchill are important pieces of infrastructure for northern communities and to the economy of Canada. Partnering with First Nations and communities is the right model for this investment," Rivett said.
He said Fairfax will rely on a company it has invested in, AGT Foods, to develop a plan that is "viable and profitable in the long term as a business."
One North and Missinippi Rail LP represent First Nations and communities along the rail line to Churchill.
The addition of Fairfax would be a significant move on the rail line issue. Earlier this week, Omnitrax filed a claim for damages against the federal government under the rules of the North American Free Trade Agreement, and Ottawa responded with an $18-million lawsuit against the American company.
Fairfax Financial Holdings Limited describes itself on its website as a "holding company which, through its subsidiaries, is engaged in property and casualty insurance and reinsurance and investment management."
The head of the Toronto firm, V. Prem Watsa, has been described as the "Warren Buffet of Canada" and is known for investing in, and turning around, companies in difficulty. Watsa was a significant investor in BlackBerry and Fairfax has large holdings in several companies.
Most recently, it paid nearly $11.8 million to increase its holding of Torstar Corp.'s non-voting shares to 40.6 per cent. Torstar is the owner of the Toronto Star newspaper, the Metroland group of newspapers, and other digital and print media businesses.
The federal and Manitoba provincial governments have faced growing pressure from northern residents and political leaders to find a solution to the rail line issue. Fuel and food prices have soared in Churchill and Omnitrax has laid off staff and cut service along the undamaged portion of its northern Manitoba rail line.
Omnitrax signed a memorandum of understanding with Missinippi Rail in June this year to purchase the rail line and port for $20 million. Missinippi, a consortium of northern First Nations, later joined One North to consolidate interests in buying Omnitrax's Manitoba assets.
In a written statement to CBC News, Churchill Mayor Mike Spence said the transfer of the port and rail line to a strong and stable northern regional ownership group is the priority. He applauded efforts to find a partner to help purchase the assets.
"I am pleased that there are outstanding companies that also share this vision. We now need the negotiations expedited and [to] ensure our preparations for repairs to the rail line and port are ready for the 2018 season," wrote Spence.
Opaskwayak Cree Nation Onekanew (Chief) Christian Sinclair, who is co-chair of One North, has been asked to comment on this story, but is out of the country.
