Tuesday, August 28, 2012

Twenty years before Campbell sold BC Rail, Bill Bennett floated the same deal, but for more money.....

Interesting, isn't it, just how much the public can get so wrapped up about one lousy little election Promise, where Gordon Campbell said he Wouldn't sell BC Rail, and then he did.   He Broke his New Era Promise.    ..... we should have all guessed that HST was another .......just ask Martyn Brown....

Campbell continually tried to sell the public that we still OWN the railway lines, Falcon tells the same story, and why shouldn't the Finance Minister preach the same story..... they are both, through and through, BC Liberals.

There is the question of money, the amount of money involved when the BC Liberals finally decided to go ahead and put BC Rail on the Auction Block.  It's almost like the BC Liberals, under Finance Minister Gary Collins, back then, basically picked a number out of thin air, and said..... a Billion Dollars will Do.

Of course there's the 9% Indemnity Clause that was included in the deal , adequately covered by RossK and Norman Farrell, they have that one nailed to a wall..... which is now getting closer to the Billion Dollar mark owed back, if CN Rail doesn't use the tax loophole.

Bill Bennett picked a larger number for the sale of BC Rail, ........  One and a Quarter Billion....... and we're talking in 1984 Dollars!

It was floated as an idea during a time when Bill Bennett, the Premier, said that "BC isn't for Sale!!!!"

This is what old Bill endorsed:
As at December 30, 1983 and giving effect to certain transactions occurring thereafter, the net book value of the fixed and current assets of the Railway would be $1.25 billion as disclosed in the "Pro Forma Balance Sheet of BC Rail Ltd."

Twenty years later, its the BC Liberals turn to put a price tag on the Promise not to sell BC Rail, a Cool $1,000,000,000 with only one hiccup..... a raid on the BC Legislature in regards to the BC Rail sale....... .

Wondering what kind of trinkets that was for sale in 1984 for One point Two Five Billion Dollars  would cost in 2012 dollars       $2.759 Billion!     Eight years earlier.....  2004....  $2 Billion...and El Gordo sold out for half, not even batting an eye at how the rate of inflation would have an effect on the going price twenty years later.

Inflation Calculator
From the pages of this "Offering Memorandum" there's a few facts you should know about.  The miles are now kilometers, and the rail line has more length in 2003/2004 than there was twenty years before.

Railway Assets

The Railway includes 1,775 miles of track of which 1,390 miles are main lines and the remainder are railway yards and sidings . The map on page 3 illustrates the Railway 's main lines. The Railway inter-connects with the North American railway system through interchanges with Canadian National Railway (' 'CNR' ') at Prince George, Dawson Creek and North Vancouver. By means of barge transportation , connection can be made through ocean ports at Squamish and North Vancouver to the Canadian Pacific, Burlington Northern and Union Pacific Railways.

The Railway operates 128 locomotives, of which seven are leased, and approximately 10,000 freight cars, of which 3,000 are leased.

The principal maintenance facilities for the Railway are at Squamish and Prince George. A locomotive repair shop, a car repair shop and stores facilities are at Squamish. A car repair shop, additional stores facilities, a work equipment shop, a yard office and a locomotive servicing facility are at Prince George. Administrative offices are at North Vancouver in a new building opened in 1983. Additional facilities are located at the various communities served by the Railway.

The Railway includes a separate 23-mile rail line connecting transcontinental rail carriers to Roberts Bank, the port facility for coal mines in Alberta and southeastern British Columbia. The Railway also includes a telecommunications system which provides services to BC Rail and others and a trucking fleet operated in conjunction with its piggyback service

Carloads stats for 1983 / 1982 / 1981


Hmmmm... the original sale did include the Spur line to Roberts Bank, is that why the 1984 BC Rail line was worth more than in 2003/2004 with the Roberts Bank line being "sold" off separately......

Is that what El Gordo and Gary Collins did?  They hived off the Roberts Bank portion of the 1983 number AND didn't get either appraised, for the value of the rail in 2003?


And here's a teaser for you.  In 1984 one of the Directors was .....Glenn W. McPherson!

Does the name ring a bell?     We thought it sounded familiar.

We did a search in Google using these keywords:    offering memorandum "BC Rail"  1984

Sixth result down 

Glenn McPherson Fonds

File Format: PDF/Adobe Acrobat - Quick View
board member of the BC Rail Corporation. Working closely ... Biographical Information Series- CVs, handwritten memorandums, newspaper clippings .... 2-1 Scrapbook Series- “1971-1984 Vancouver Port Authority; Canada Port. Corporation ...
 Page 10 of 38

"Snip...... He became a lawyer in 1935 but only practiced for two years before moving into the public sector as legal counsel to the Custodian of Enemy Property. In 1937, this position involved redistributing property confiscated during World War One, but by 1939 he was advising the Custodian on issues related to the Second World War. As war broke out, McPherson was also recruited into William Stephenson’s (the British-Canadian spy code-named Intrepid) “Security Organization.” As part of this dual role, McPherson was responsible for deciding whether Japanese-Canadians should be interned in 1942. For the next 2 years he administered the confiscated property of the internees. As the war ended, McPherson played a central role in organizing the two Quebec Conference meetings between Roosevelt, Churchill and Mackenzie-King.

After the war, McPherson moved to the private sector as president of a series of firms in the expanding helicopter industry. While president of the BC-based Okanagan Helicopters, McPherson played a significant role in the establishment of both helicopter and lift skiing on Whistler Mountain. In the mid-1960s, he travelled to Moscow as part of a delegation investigating Soviet helicopter technology......Snip


Anonymous said...

What happened to the priceless Real Estate, that went with the BCR? Did Campbell lease that out too?

North Van's Grumps said...

BC Rail Properties is still trying to sell the Real Estate


Anonymous said...

Indemnity Clause may have been covered in the past, but do you really think it takes the Canada Revenue Agency 8 [EIGHT] years to make a tax ruling?

That tax liability stills hangs out there so Ottawa can swing the Sword of Damocles should the province get too uppity.

Anonymous said...

CN has already used the operating-loss credits that it acquired in the BC Rail transaction, over a four-year period. According to Note 15 of CN's financial statements for the years 2004, 2005, 2006 and 2007, CN has applied all of the BC Rail losses it purchased to its income tax owing for those years and has presumably gained whatever tax reductions it can from them. Its rate of federal income tax during that time was 22%, which would have generated a tax reduction of about $187 million. The statements do not indicate the rate of provincial tax that CN is subject to, so the value of the losses in reducing provincial tax is not clear.