RailAmerica, Inc. announced that it will transfer ownership of the right of way corridors of the 181-mile E&N Railway to the Island Corridor Foundation on Friday, March 24, 2006.

The Island Corridor Foundation is a non-profit organization which anticipates using the railroad for passenger service. The Island Corridor Foundation is managed by 13 First Nations Groups and 6 municipalities on Vancouver Island. RailAmerica will receive approximately 850,000 ($1 million CAD) in cash and a promissory note for approximately $300,000 ($350,000 CAD) from the sale of contract and regulatory rights associated with the rail operation. RailAmerica anticipates being able to utilize approximately $4.3 million ($5 million CAD) in tax benefits in Canada from the charitable gift donation.

A transition agreement between the parties provides that RailAmerica's subsidiary, E&N Railway, will continue to operate the railroad until operations are transferred to a new railway operator, on or before June 30, 2006.

RailAmerica recognized a $12.6 million pre-tax or ($8.7 million after-tax) impairment charge in the third quarter of 2004 at which time it announced plans to dispose of the railroad. This transaction will have no material impact on RailAmerica's 2006 financial results.