Canadian Pacific Railway (CPR) plans to pare back its position in the partnership that owns the rail tunnel connecting Windsor, Ont. and Detroit.
CPR said Wednesday it will cut its interest in the Detroit River Tunnel Partnership (DRTP) from 50 per cent down to 16.5 per cent, with the majority ownership going to the other partner, Toronto-based Borealis Infrastructure Management.
But the deal allows CPR to retain its exclusive right to operate and maintain the Detroit River Tunnel, the company said.
CPR said its proceeds from the deal will be $110 million, plus “additional proceeds” of $22 million, based on future freight volume through the Detroit River Tunnel.
“This transaction allows us to realize value for our asset and strengthen our balance sheet while preserving our right to operate the tunnel,” CPR CFO Kathryn McQuade said in the railway’s release.
The tunnel, which takes rail traffic across the Canada-U.S. border, is viewed as a “vital link in the North American transportation
infrastructure,” CPR said.
“The Detroit River Tunnel is an investment that fits into our long-term
strategy of securing infrastructure assets that can generate stable and
sustainable returns,” said Michael Nobrega, CEO of Borealis’ pension-fund parent, OMERS (Ontario Municipal Employees Retirement System).
Borealis’ business is to invest in and manage “infrastructure assets that provide institutional and large corporate investors with competitive and stable rates of return over a long investment horizon.”