June 16, 2011 / 1:48 PM / 7 years ago

UPDATE 2-CN to sell IC Railmarine Terminal assets for $73 mln

* Sells assets to affiliate of Foresight Energy LLC

* Foresight to double terminal capacity to 8 million tons per year

* CN Expects the deal to close in about 45 days (Adds company comment, updates share)

June 16 (Reuters) - Canadian National Railway Co said it will sell assets of its indirect subsidiary, IC RailMarine Terminal Co, for $73 million and enter a related 10-year coal transportation agreement to increase its participation in the growing export of Illinois Basin coal.

Canada’s biggest railway said it will sell the assets of the unit to an affiliate of Foresight Energy LLC and the Cline Group. Foresight Energy has about 3 billion tons of coal reserves and coal production from four mining complexes in Illinois.

The terminal, which is located on the east bank of the Mississippi River at Convent, Louisiana, stores and transfers bulk commodities and liquids between rail, ship and barge, serving customers in North American and global markets.

CN, which expects the transaction to close in about 45 days, said it will enter a rail transportation agreement with Savatran LLC, another affiliate of Foresight and Cline, after the deal closes.

“These initiatives will allow CN to make better use of its southern rail corridor,” the company’s Chief Financial Officer Luc Jobin said.

Foresight will double the capacity of the terminal to 8 million tons of export coal per year, with the potential for an additional expansion of 8 million tons, CN said in a statement.

The coal transportation agreement entails hauling of coal from four Illinois mines to the Convent transfer facility. Under the terms of the deal, Savatran will ship a minimum annual volume of coal via CN.

CN shares were trading down 8 Canadian cents at C$73.45 on Thursday on the Toronto Stock Exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Roshni Menon)

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