Monday, May 12, 2008

 

The Billion-Dollar Cheque and BCRail's option to repurchase

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An interested observer has spent some time trying to chase down the payment from CN for the purchase of BCRail shares (noted in the CN financial statements and referenced earlier here at TLR) to its final resting place in the Province's bank account(s).

He writes, "I know some readers would have expected such an infusion of cash would have been accompanied with a 'media moment' photo of a CN Rail officer handing over a big cardboard cheque to the Premier and his friends but, as far as I can ascertain, there is no such moment in the 'public' record." Our "Interested Observer" continues:

However, the sale is recorded in the Summary Financial Statements for 2004/05.

These records are available here:

http://www.fin.gov.bc.ca/ocg/pa/04_05/PA_2005_Summ.pdf


In the NOTES to the Financial Statements - SIGNIFICANT EVENTS (note 33) the reader will find the following (among other things):

"The gain on the BC Rail/CN Transaction is $199 million, calculated as follows:


The balance of the note (it's on page 66 of the printed text -
page 44 of the online text) - is also interesting - particularly this:

The Revitalization Agreement has an initial term of 60 years and gives CN the option to renew the lease for an additional 30 years at no cost to CN, and allows for further extensions to the term of the Revitalization Agreement should BCRC not exercise its option to repurchase the rail operations. The maximum term of the Revitalization Agreement is 990 years.

"I note this in passing not least because of some recent speculation about what events in New Zealand might say about things back here in British Columbia."


There are more details about the disposition and uses of funds in the transaction.

Interested Observer says that - when he gets time - he'll post something about them as well. Meanwhile, he suggests that we open the pdf and have a look at note 33.

The interesting thing, he says, would be to do some hypothetical illustrations of what has happened since the 'sale' and how the financial side has changed because of the sale - the 333 million payment to the government is also interesting although I'm not going to deal with it in this first posting.

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"... should BC Rail not exercise its option to repurchase the rail operations" ... it says. WooHoo! Many thanks to Interested Observer for all this information ... specially for that one particular line. Many thanks indeed!!!

Special thanks also to Kootcoot from http://houseofinfamy.blogspot.com/ for improving legibility in the accounting segment (above). - BC Mary.

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