BANGOR – Chicago-based Rail World Inc. has signed an agreement to purchase the financially struggling Bangor and Aroostook System for an undisclosed amount.

Terms of the deal – including how much Rail World is willing to spend for the 745 miles of B&A’s rail line in Maine, Quebec and New Brunswick – will be submitted to U.S. Bankruptcy Court in Portland by the end of the week.

Frederic Yocum, president of B&A System, said Tuesday that all of the seven rail lines and companies that make up B&A System have to sign the agreement before it can be given to the bankruptcy court. So far, only Bangor and Aroostook Railroad, the primary rail line in the system, has agreed to the deal.

The other affiliates that make up B&A System include Quebec Southern Railway, Canadian American Railroad, Northern Vermont Railroad, Newport & Richford Railroad, Van Buren Bridge Co. and Logistics Management System.

It has taken more than seven months to get to the point at which an actual deal was signed. Last fall, Rail World announced it wanted to purchase B&A System for $62 million. But that deal wasn’t completed before bankruptcy court Chief Judge James Haines followed through on a request from three creditors to involuntarily place just B&A Railroad into bankruptcy. The creditors had been owed more than $7 million by the railroad.

Two weeks ago, the six other rail lines and companies that make up B&A System voluntarily sought bankruptcy court protection. The filings, which took place over two days, were a concerted effort to ease and expedite the sale to Rail World. Trustees still need to be appointed to oversee the bankruptcy proceedings for each of the lines and companies. It is likely, however, that attorney James Howard, the trustee in B&A Railroad’s bankruptcy proceeding, will be named for all of them because he is familiar with the entire system.

The price Rail World has agreed to pay for B&A System may not be what it actually spends to buy it. Haines will be asked to approve the deal, but he is expected to seek other outside bids from interested companies for the lines. That could start a bidding war that would bump up the purchase price.

“We’re actually hopeful that anyone who knows the price will review it and decide whether to jump on it,” Yocum said.

Howard, in a statement, said the deal he negotiated with Rail World keeps the rail system intact. Other possible suitors may want to only buy pieces, he said.

“We are well aware that any alternative could involve a balkanization of the network with potential line abandonments and loss of rail service to small communities,” Howard said.

Yocum said he predicts Haines will select a buyer by July 8 and the sale will be closed by the end of August.

Rail World, an investment consortium made up of current and retired presidents of rail systems, plans on changing the name of B&A System to Montreal, Maine & Atlantic Railway LLC.

Yocum views the sales agreement as the brakes that will halt the substantial losses being experienced by B&A System. He said that in the last few years, B&A System has lost up to $15 million each year. And the last year has been the worst of the financial hits, as businesses seeking long-term rail service contracts have looked elsewhere because they were uncertain whether B&A System would remain solvent, he said.

“We have been very vulnerable,” Yocum said.

Larry R. Parsons, president of Wheeling and Lake Erie Railroad and an investor in Rail World, said Tuesday that the deal “is a step forward” to making the system profitable.

Edward Burkhardt, president of Rail World and former president and CEO of Wisconsin Central Transportation Corp., said in a statement: “We believe this can be a highly successful railway and are anxious to close the purchase as soon as possible. We are particularly impressed with the quality of the employees and the customer base.”