MILO – State and local officials are “cautiously optimistic” about Thursday’s announcement of the pending sale of the Bangor and Aroostook Railroad.

Although officials called it good news that a consortium intends to purchase all of the operating assets of the B&A Railroad, they were guarded in their comments because of the unknowns.

“If this is what it appears to be, it’s great news for Piscataquis County,” Greenville Town Manager John Simko said Friday.

According to a press release issued by the railroad Thursday, a consortium of Rail World Inc., the Wheeling Corp., and others, have entered into a letter of intent for the consortium’s cash purchase of B & A’s rail properties for $62 million.

Under the agreement, the consortium will purchase the stock of the Quebec Southern Railway Co. Ltd., the operating assets of the B & A Railroad, the Canadian American Railroad Co., the Van Buren Bridge Co., Logistics Management System Inc., as well as the Northern Vermont Railroad Co. Inc. and the Newport and Richford Railroad Co., except south of Newport, Vt.

“We think there’s a viable railroad to be operated,” Larry Parsons, chairman and CEO of The Wheeling Corp., said Friday. In a telephone call, Parsons said the consortium would manage what’s there and have no plans to abandon any part of the rail system. The consortium chose not to include the railroad south of Newport, Vt., because officials feel it should be abandoned, he said.

Parsons said the Derby shop would be operated in the foreseeable future, but beyond that he could not be specific. “Predicting the future is really tough.” He said he was encouraged by the customers and the employees of the line and said the business environment in Maine appeared to be positive. “We think there’s a good railroad to be operated,” he said.

“It is a good deal because it appears to keep all of the B&A system in an active status,” said Allen Bartlett of the freight transportation division of the Department of Transportation on Friday. He declined to comment further given the uncertainties of the bankruptcy situation.

“It looks like exactly what we wanted; we really need to see what will happen now,” Simko said. There are still some processes that must be completed by the railroad before any sale is made, he said.

These include paying off creditors, having bankruptcy court proceedings dismissed, and having the sale approved by the federal Surface Transportation Board.

The matter is before the U. S. Bankruptcy Court in Portland because three creditors, who collectively are owed $7.1 million for locomotive and railcar leases to the railroad, asked the court to place the railroad involuntarily into bankruptcy protection. A decision is expected at an Oct. 25 bankruptcy court hearing in Portland whether to continue proceedings to determine if the railroad should be placed in Chapter 11, or if the request should be dismissed or suspended in the wake of the pending sale.

Parsons said the consortium is buying only the assets and would not be responsible to pay the creditors and expected that the bankruptcy court would order the B&A to make those payments.

Milo Town Manager Jane Jones said Friday that she was waiting for “additional concrete” information as to the actual details of the sale and how it will affect the stretch of railroad from Brownville to Lake Megantic. Once that information is released, the local impact to Milo and to the economic development efforts in Piscataquis County will be known.

Milo, Brownville and most recently Greenville agreed to share attorney costs to represent the towns in the bankruptcy proceedings. Officials want to ensure that if the railroad is sold, that it is sold as a whole package for the good of the public. A stipulation in the federal bankruptcy law governing railroads states that a judge essentially must take notice of what is in the best interest of the public, according to Jones.

“There is a definite public interest component in having a healthy railroad,” Jones said.

While Milo provided tax increment financing to the B&A for its Derby shop improvements, Jones does not foresee any loss from that standpoint. But there is a whole host of other pressing matters, she said. For instance, the railroad owes the town about $190,000 in taxes. Because the town is a secured creditor, Jones feels comfortable that a sale cannot be made without the town being compensated.

Jones hopes that if the sale is approved, the new owners will keep the Derby shop in operation and continue the employment for the approximately 50 people there.

County and municipal officials have said that if Piscataquis County is going to have any chance at prosperity in the 21st century, the state needs to help the railroad industry, and in particular, the B&A Railroad.

“Having an east-west railroad is critical to our state’s economy,” Mark Scarano, business development director for the Piscataquis County Economic Development Council, said Friday. “It affects all of eastern and northern Maine directly and indirectly,” he said. In particular, it will affect Mack Point, the Derby yard, Great Northern Paper Co., the Acadian Railway’s plan to offer excursion passenger rail service through the Moosehead Lake region and Piscataquis County’s present and future economic development efforts.

Simko said the railroad is very much a part of Piscataquis County. “I am seeing more and more interest in [Greenville’s] industrial park and some of those plans require rail.” It is important, he said, that the company that takes over the railroad becomes a team player with local communities.