Published:June 25, 2021
The company behind a proposed railway from northern Canada to Alaska has filed for bankruptcy protection and may be sold off to repay creditors, less than nine months after Donald Trump granted a presidential permit for the US$18 billion project.
Alaska-Alberta Railway Development Corp. was granted protection from creditors by a Canadian court after the receiver of a private lending firm called a $149 million loan.
A2A, as the railway company is called, plans to start a court-supervised sale process while also pursuing the refinancing of its debt, the company said in a statement on its website.
“This could include a sale of the company’s business on a going-concern basis including engineering, permits and pending permits, right-of-way agreements, marketing materials, agreements and relationships with proposed partners, First Nations and Alaska Native entities – developed for the project,” A2A said in a statement.
Trump issued a presidential permit for the railway in September, announcing the move on Twitter: “Congratulations to the people of Alaska & Canada!”
The railway company is the largest debtor of Bridging Finance Inc., a private lender that was put into receivership as Canada’s main securities regulator investigates alleged mismanagement and self-dealing. The receiver now in charge of Bridging, PricewaterhouseCoopers, called the loan earlier this month, forcing the railway to make the bankruptcy filing to prevent its assets from being liquidated, A2A said.
Founder Sean McCoshen, who is the driving force behind the railway project, will not be involved in the process, the company said.
McCoshen is one of the people named in documents related to the Bridging investigation. Regulators have alleged that on several occasions, his companies sent money to the personal bank account of former Bridging Chief Executive Officer David Sharpe, around the same time as Bridging was advancing money to A2A.
The proposed 1,600-mile rail link that would run from an oil-rich region of northern Alberta to Alaska carries an estimated price tag of $22 billion, the company said.
“Despite its lender’s receivership, the company believes that the A2A rail project concept is sound, and has already made significant progress toward full financing, above and beyond the development capital provided by Bridging Finance over the past five years,” A2A said in the statement.