Canadian Council for Public-Private Partnerships Via Rail Luncheon Event

Prepared by Amberlight Productions June 16, 2015

                                                                                           

 Yves Desjardins-Siciliano Interview Schedule Thursday, June 4 Outlet: Globe and Mail

Interviewer: Eric Atkins Format: Print *Eric also spoke with Mark Romoff

  Outlet: Thomson Reuters Interviewer: Allison Martell Format: Print  

  Outlet: The Canadian Press Interviewer: Alexandra Posadski Format: Print

  Outlet: Bloomberg News Interviewer: Ari Alstedter Format: Print

  Outlet: Transportation and Logistics Interviewer: Ken Mark Format: Online

  Outlet: 680 News Interviewer: James Munroe Format: Radio

  Outlet: Daily Commercial News Interviewer: Lindsey Cole Format: Print

         

                                                              The head of Via Rail Canada Inc. brought his pitch for private investment to Toronto on Thursday, promoting a chance to reshape the money-losing passenger-train service. Yves Desjardins-Siciliano told a room full of bankers, pension-fund managers and developers the $3-billion proposal to buy and build dedicated passenger train tracks in the busy Toronto-Ottawa-Montreal corridor could bring double-digit returns to a consortium of investors in the Crown corporation.

This is a catch-all ASF view; only displays when an unsupported article type is put in an ASF drop zone “We are striving to make Via Rail more relevant to Canadians … while not over overburdening Canada’s taxpayers,” Mr. Desjardins-Siciliano said. “A corollary to that may be a way for the private sector to put its shoulder to the wheel.” Most of Via Rail’s trains travel on rails owned by freight carrier Canadian National Railway Co., leading to congestion and delays that drive away customers. Mr. Desjardins-Siciliano said passenger trains that travel at 110 miles an hour are incompatible with much slower cargo trains. He pointed to Via Rail’s on-time performance of 63 per cent in the first quarter, compared with 71 per cent a year earlier. In the first three months of 2015, Via Rail’s operating loss was $86-million. Dedicated tracks and more frequent service in the key Toronto-Ottawa-Montreal corridor would help the company boost ridership and revenues while capitalizing on a demographic shift that is fostering an interest in train travel, he said. Younger people care little about car ownership, one-quarter of Canada’s population will be more than 65 years of age by 2040 and many immigrants come from countries where trains are dominant modes of travel, he said. Via service falls under three categories: long-distance travel and tourism in Western and Eastern Canada, mandatory service in rural and remote areas, and intercity travel in the busy and densely populated Windsor-Quebec corridor, which carries the vast majority of Via Rail’s 3.8 million passengers at a government subsidy of $48 a person. Via is considering offering investors a stake in the busiest part of the latter section, Toronto-Montreal-Ottawa, and predicts ridership could increase by 3.5 times with dedicated tracks and better service. Currently, 87 per cent of trips between Toronto and Montreal are by car, a number that has risen from 33 per cent in 1990, as Via service has deteriorated.

Mark Romoff, chief executive officer of the Canadian Council for Public-Private Partnerships, said there is a lot of interest in Canada and overseas in a possible partnership with Via. A spokesman for CN said there are inevitably “trade-offs” when freight and passengers operate on the same tracks, but noted traffic on the Windsor-Quebec corridor moves well. “CN requires all of its rail network in the Quebec City-Windsor corridor and none of it is for sale. Moreover, VIA Rail has not requested the purchase of any portion of CN’s track in the corridor,” Mark Hallman said. Mr. Desjardins-Siciliano said a high-speed rail project is not under consideration, referring to Via Rail’s proposal as “high-frequency.”     Please find this article online below: http://www.theglobeandmail.com/report-on-business/via-rail-looks-to-private-investment-for-3-billion-dedicated-track-plan/article24814969/    Please find this article reposted online below:      http://www.bnn.ca/News/2015/6/5/VIA-Rail-looks-to-private-investment-for-3-billion-dedicated-track-plan.aspx https://www.railwaysuppliers.ca/english/news/via-rail-looks-to-private-investment-for-3-billion-dedicated-track-plan.htm http://newsalberta.ca/2015/06/04/via-rail-looks-to-private-investment-for-3-billion-dedicated-track-plan/

                    Alexandra Posadzki, The Canadian Press Published Thursday, June 4, 2015 2:52PM CST Last Updated Thursday, June 4, 2015 2:54PM CST TORONTO -- The chief executive of Via Rail says it's a good time to expand passenger rail service in Canada by building dedicated tracks and increasing the frequency of its trains. "There is a renaissance and an emergence of a train culture in Canada," Yves Desjardins-Siciliano said at a luncheon held in Toronto by the Canadian Council for Public-Private Partnerships. Demographic factors such as the pro-environment values of millennials, the growing number of seniors with mobility issues and an influx of immigrants from countries where train culture is

prevalent make it a good time to boost passenger service, Desjardins-Siciliano said Thursday. "Young Canadians -- millennials -- have a green heart," he said. Via Rail hopes to raise $3 billion from private investors in order to build dedicated passenger tracks between Toronto, Ottawa and Montreal. The company says the long-standing practice of sharing infrastructure with freight trains has hurt its ridership, which has been eroding in recent years. The number of Via Rail passengers declined to 3.8 million last year from 4.1 million in 2010, according to the company's financial statements that included a $317.1-million operating loss last year. Desjardins-Siciliano says that by doubling the frequency of service along that route, Via could triple its ridership. "If you add frequency, you add availability and convenience -- and you automatically add ridership," Desjardins-Siciliano said. "But if we don't own the tracks we can't add frequency as we wish." Higher ridership would boost the line's profitability and could help subsidize other, less profitable routes, ultimately reducing the extent to which taxpayers foot the railway's bills, he said. But Desjardins-Siciliano said he doesn't foresee the company going private. "I think Via Rail will always be a public service company, because we're servicing Canada, and you'll always have routes that can't sustain themselves," he said during an interview following his speech.

Desjardins-Siciliano also brushed off the notion of Via Rail implementing high-speed rail lines, such as those in Europe and Japan, calling the development of such lines uneconomical. High-frequency service, such as the kind currently being proposed by Via Rail, delivers "70 per cent of the benefit for 30 per cent of the cost" of high-speed service, he said. "It's a more profitable model." The Ontario government is planning to build a high-speed rail line connecting Windsor, London, Kitchener-Waterloo and Toronto. The province intends to invest $29 billion into transit and transportation infrastructure projects over the next decade.      Please find this article online below: http://www.680news.com/2015/06/04/via-rail-chief-says-demographics-makes-it-right-time-to-boost-passenger-service/ http://www.castanet.net/news/Business/141471/Via-Rail-chief-says-demographics-makes-it-right-time-to-boost-passenger-service http://thechronicleherald.ca/business/1291113-via-head-urges-more-rail-service-to-meet-demand http://winnipeg.ctvnews.ca/via-rail-ceo-says-demographics-makes-it-right-time-to-boost-passenger-service-1.2407087

http://www.huffingtonpost.ca/2015/06/05/via-rail-ceo-says--demogr_n_7513370.html http://www.news957.com/2015/06/04/via-rail-chief-says-demographics-makes-it-right-time-to-boost-passenger-service/ http://www.ottawacitizen.com/business/Rail+says+demographics+makes+right+time+boost+passenger+service/11109088/story.html http://www.winnipegfreepress.com/business/via-rail-chief-says--demographics-makes-it-right-time-to-boost-passenger-service-306172471.html http://article.wn.com/view/2015/06/05/Via_Rail_CEO_says_demographics_makes_it_right_time_to_boost_/                            

                Via Rail Canada Inc. is meeting with pension funds and firms like Bombardier Inc. as potential partners for a C$3 billion ($2.4 billion) track between Toronto and Montreal. It’s also exploring taking on debt if it has to go it alone. Chief Executive Officer Yves Desjardins-Siciliano plans to meet in coming months with SNC-Lavalin Group Inc., Bombardier and Siemens AG, along with Canadian pension funds like Caisse de depot et placement du Quebec, Ontario Teachers Pension Plan and Ontario Municipal Employees Retirement System. At the same time, the Montreal-based passenger rail service is considering securing funds itself by issuing so-called green bonds, he said. “We will start by approaching all the usual suspects,” he said in an interview in Toronto on Thursday. “We are scheduling those meetings as we speak over the summer.” Desjardins-Siciliano is looking to combat falling ridership and a widening deficit by sending trains along Via’s busiest route, with stops in Ottawa, more frequently and more reliably. That would allow Via to attract more passengers and shrink the subsidy it needs from its sole shareholder, the federal government. But the plan is only possible if Via, which currently shares track with slower moving freight trains, builds its own, the executive said. Its federal

subsidy increased 8 percent to C$114.6 million last quarter from a year earlier. The most likely route is a partnership with private firms or investors, he said. That would see the private partner contributing C$2 billion, likely 10 percent equity and 90 percent debt, in exchange for a period of ownership during which Via would pay a fee for use, he said. The remaining C$1 billion would be from what Via was already going to spend on new train cars. Green Bonds Selling green bonds would also be an option because the funds would be used in an environmentally sustainable project, Desjardins-Siciliano said. Ontario sold C$500 million of green bonds last year to fund projects like an extension to Toronto’s subway system. Desjardins-Siciliano expects return on investment for the project to be in the “mid-teens” and his meetings with companies and financiers in coming weeks will determine how those returns are divided between investors and Via. “They will have to bid to build the better track, the faster track, the most reliable track, at the lowest cost, considering somebody else is bidding against them,” he said. “Of that double digit return, we will give as little as we have to, and as much as the market will require.” Created in 1977, Via Rail operates from British Columbia to Nova Scotia. While it serves remote communities such as Churchill, Manitoba, the bulk of its ridership moves between Windsor, Ontario and Quebec City, the country’s main commercial corridor that includes Toronto and Montreal.      Please find this article online below: http://www.bloomberg.com/news/articles/2015-06-04/via-rail-seeks-partners-mulls-debt-for-toronto-montreal-line

James Munroe speaking with VIA Rail Chief Executive Officer Yves Desjardins-Siciliano. Aired Thursday, June 4 2015     Please find this interview online below: https://www.dropbox.com/s/3wcx0fwoy7podgt/680%20News%20-%20VIA%20Rail%20.mp3?dl=0

A VIA Rail proposal to raise $3 billion in private investment to buy and build dedicated passenger tracks along the Toronto-Ottawa-Montreal corridor has the potential to roll out as a public-private partnership (P3) says the company’s president and CEO.

"We need to increase the relevancy and usefulness of VIA Rail to Canadians in the highly densely populated area of Toronto, Ottawa and Montreal, partially in response to the huge congestion in and out of those towns," Yves Desjardins-Siciliano stated after an event presented by the Canadian Council for Public-Private Partnerships. "The only way to do that is to build a dedicated passenger rail infrastructure, but the trick is to do it without burdening the Canadian taxpayer, and that's where we're looking at private market participants to finance the 'trackage' and the signaling systems for a dedicated corridor. Right now from a market testing point of view, we're trying to see what the appetite is."

Today, he says, VIA Rail trains travel on average at 70 mph, but the equipment is capable of running between 100 and 110 mph. "That 40 per cent difference is what explains the diminishing time-to-destination on some of these lines," he explains. The trains run mostly on tracks owned by the Canadian National Railway Company and the increasing number of freight trains is impacting service. Desjardins-Siciliano states dedicated tracks would nearly "quadruple" ridership (3.5 times), eliminate the operating deficit of the corridor, and provide investors with a possible "double-digit" return. According to his presentation, "high-frequency rail," as it's being coined, would reduce times from Toronto to Ottawa from three hours and 48 minutes to two hours and thirty minutes; Ottawa to Montreal from one hour and 49 minutes to one hour and 20 minutes; and Toronto to Montreal from four hours and 32 minutes to three hours and 45 minutes, preliminary estimates show. "We needed to find another way, because the ridership is diminishing, the on time performance is worsening," he says. One of the possible options being considered for this proposal is a P3, design-build-finance-maintain model. Construction for the track infrastructure would be "just north" of $2 billion, Desjardins-Siciliano adds. "Timing is everything and the timing is great here in Canada because there's been so many PPPs around transit

developed over the last 10 years from Vancouver all the way to the P.E.I. bridge. Therefore there's huge expertise here," he says. "The creativity of professional providers who do this around the world...you get the best capabilities." Desjardins-Siciliano was quick to point out that many options are being considered and different parties may have different options they put forth. "It may be that some players may look at this business case, do their own analysis, and believe that the risk is worth taking and they'd rather take the whole thing and assume the risk of the business case," he explains. "If it's more like we're expecting, which is that they will not want to take the business case risk...therefore they will take less of it, which brings us back to trackage and signaling, for an ongoing return, which is availability payment." The presentation notes it is a low execution risk because three-quarters is on existing railroad tracks, but all delivery models are still being explored. "The modelling, is the structure P3? Or, is it direct debt financing? Or, should it just be traditional appropriation from the government? We will be looking at options," he adds. The CEO also noted this proposal is strictly a VIA Rail management initiative and not that of the federal government, the company's main shareholder.

"By the end of the year, or early next year, we'll go to our shareholder, the government of Canada, and say, 'If you want to increase the relevancy of VIA...we have to build a dedicated corridor,'" he says. "We'll see where we are next year at this time." Creating dedicated tracks, Desjardins-Siciliano states, can also happen over time, improving travel along the way. "Because it's not grade separated, you're able to incrementally improve the service," he says. "It's not a build it and after 12 years cut a ribbon and now the service is available. It's incrementally improve the service. In total, the whole project deployment is estimated at five to seven years." Jun 16, 2015 Please find this interview online below: http://dailycommercialnews.com/Projects/News/2015/6/VIA-Rail-looks-to-raise-3-billion-for-track-construction-1008331W/

Pending Coverage

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