GHR Inc. is a shortline rail company created to bid for the line being abandoned by CP running from Hodgeville, through Gravelbourg to the CP Expanse near Mossbank.

Last week seven municipal governments issued a media release regarding the line's status and the proposed value of the line.

In an official response GHR has responded that it believes GHR can come to a commercial agreement with CP that is beneficial for all parties.

Louis Stringer, GHR Chair, said "If all parties are willing to act reasonably there is a deal there that will be good for CP, good for the communities and good for the shortline."

Stringer noted that the reason CP provided for abandoning the line was insufficient volume. GHR has built a business case that will see increased volume on the line and "while it will not be wildly profitable, there is no good economic reason it cannot deliver a reasonable return."

Stringer noted that shortline rail companies have a strong record in Saskatchewan, particularly in the regions surrounding the GHR line. There are real opportunities for shortlines to network to garner benefits for their members, including organizing multi-car loading benefits and achieving diversion premiums from terminals.

CP's cost base is significantly higher than the shortlines and, importantly, its shareholders expectations for returns are much higher.

The shareholders in GHR are in the vast majority individual farmers but the group includes Farmers of North America (FNA).

FNA has been providing administrative and consulting support to the GHR Board of Directors. FNA became involved in GHR with the objective of "maintaining and expanding farmer choice, farmer market power, and a competitive transportation system" according to Bill Martin, speaking for FNA.

FNA shares the deep concern of GHR shareholders that transportation is a key variable in farmer costs and see it as a variable over which they can exercise some control if competitive alternatives are driven into the system.

FNA supports GHR's efforts to reach a commercial agreement with CP and will lend whatever organizational and persuasive resources it has to see a fair deal concluded. Transportation costs are increasing and FNA says that if even more trucking is forced on to farmers, it will become a dramatic factor in the cost structure of Saskatchewan agriculture.

Stringer said that CP has put forward a price and GHR has submitted an offer, but the numbers are too far apart.

He noted the local governments exasperation expressed in the first week of July that the valuation approach may be founded on ideas for the existing track that would make it impossible for any group to acquire the line.

"Although there has been plenty of evidence in the past of both national railways deliberately demarketing raillines, we do not think that is happening in this case. We do not currently see concrete evidence that CP is determined to prevent the line from being used in a competitive environment as part of a plan to force all traffic onto CP lines via trucking to distant delivery locations."

"We do believe that CP is sincere in its willingness to come to a fair price. Right now we are committed to approaching the process with optimism and expect CP to take the opportunity to negotiate a deal that is good for all involved before everyone's hand is forced by the government regulator."

For more information contact:

Louis Stringer, Chairman GHR Inc. 1-306-648-2332 or 1-306-648-3209
Bill Martin , Farmers of North America 1-306-260-9546