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RailAmerica to operate CP rail line in Ontario primarily for pulp and paper transport

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RailAmerica to operate CP rail line in Ontario primarily for pulp and paper transport

October 04, 2010 - 09:57
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JACKSONVILLE, FL, Oct. 4, 2010 (PRNewswire-FirstCall) -RailAmerica, Inc. today reported that its subsidiary RaiLink Canada Ltd. has entered into a long term operating agreement with the Canadian Pacific (CP) Railway to operate a portion of the Ottawa Valley Railway (OVRR) line. In December of 2009, the company announced the termination of its lease with CP of the OVRR. As part of the terms of the lease termination, the company continued to operate 157 miles of the line between Sudbury and Mattawa, Ontario, and between Mattawa and Temiscaming, Quebec for an interim period of time. RailAmerica has now agreed to continue to operate these segments of the OVRR under a new, five year operating agreement with an option for future extension. The Company expects the agreement to result in a positive contribution to net income.

RailAmerica President and CEO John Giles said, "We are pleased to maintain this railroad as part of our portfolio and continue our relationship with CP under this new operating agreement. The current operation remains an attractive enterprise for both us and CP. We look forward to a productive, long-term relationship with CP and the customers of the OVRR."

The OVRR operation primarily transports pulp, paper and allied products. The Company will adjust historical financial statements to reflect OVRR as a continuing operation. For the six months ended June 30, 2010, the effect of this adjustment is that $0.7 million of income previously reported in discontinued operations will now be reported in continuing operations.

RailAmerica, Inc. owns and operates short line and regional freight railroads in North America, operating a portfolio of 40 individual railroads with approximately 7,300 miles of track in 27 U.S. states and three Canadian provinces.