CN (TSX: CNR, NYSE: CNI) and Kansas City Southern (NYSE: KSU)
(“KCS”) today announced that the International Brotherhood of
Boilermakers (“IBB”) filed a letter of support for CN’s and KCS’
proposed voting trust with the Surface Transportation Board
(“STB”). This letter from IBB, one of the oldest unions in the
United States representing more than 50,000 skilled craftsmen and
craftswomen and industrial workers throughout the United States and
Canada, underscores the significant benefits for organized labor
from a CN-KCS combination.
The IBB has a direct interest in the proposed
pro-competitive CN-KCS combination. As a larger, continental
enterprise with complementary routes and an enhanced platform for
revenue growth, capital investment and job creation, the combined
company would be well-positioned to create new growth opportunities
for customers, labor partners, employees and other stakeholders. CN
is committed to working with KCS’ management team to create new
jobs up and down the line.
The plain vanilla voting trust, which is
identical to the CP trust approved for use by the STB, is an
integral component of the CN-KCS combination. It prevents premature
control of KCS, allows KCS to maintain independence and protects
KCS’ financial health during the STB’s review of the ultimate
combination of CN and KCS. Additionally, CN has committed to
divesting the sole area of overlap between the CN and KCS networks
– KCS’ 70-mile line between New Orleans and Baton Rouge – thereby
making the combination a true end-to-end transaction, and has
agreed to preserve existing route options by keeping gateways open
on commercially reasonable terms. The proposed CN-KCS combination
represents a pro-competitive solution that offers unparalleled
opportunities for customers, employees, shareholders, the
environment and the North American economy.
CN and KCS look forward to further comment from
their stakeholders during the STB’s official public comment period
on the voting trust application, which will be open until June 28,
2021, as they work towards gaining STB approval of their voting
trust and completing their combination.
A full copy of the letter filed with the STB appears below:
The Honorable Cynthia T. BrownChief, Section of
AdministrationOffice of ProceedingsSurface Transportation Board395
E. Street, S.W.Washington, DC 20423-0001
Re: FD 36514, Canadian National Railway Company,
Grand Trunk Corporation, and CN’s Rail Operating
Subsidiaries—Control—Kansas City Southern, the Kansas City Southern
Railway Company, Gateway Eastern Railway Company, and the Texas
Mexican Railway Company
Dear Ms. Brown:
Central to Canadian National’s bid for Kansas
City Southern is the establishment of a voting trust that benefits
Kansas City Southern shareholders. The International Brotherhood of
Boilermakers unequivocally supports approval of Canadian National’s
voting trust. Canadian National proposes to use the same voting
trust structure as Canadian Pacific Railway, which the Board
approved with a modification. For the reasons the STB provided in
making its decision, we believe Canadian National’s voting trust
should also receive approval. The approval of Canadian National’s
voting trust will allow Kansas City Southern shareholders to make a
fully informed decision when placing their votes to approve the
transaction, and upon approval, to receive the full value of their
shares while the STB considers Canadian National’s case for a
combined, end-to-end rail network.
The Kansas City Southern-Canadian National
voting trust—as well as their request that the STB review their
voting trust with a period for public comment—demonstrates clearly
the stakeholder-focused approach to business that Canadian National
has demonstrated during our relationship. We look forward to seeing
Canadian National’s commitment to fairness and efficiency reflected
in the STB’s review of the voting trust.
Sincerely,
/s/John ManskerDirector of Rail DivisionInternational
Brotherhood of Boilermakers
cc: Parties of Record
Respectfully submitted, |
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Sean Finn |
/s/ Raymond A. Atkins |
Olivier Chouc |
Raymond A. Atkins |
CN |
Terence M. Hynes |
935 de La Gauchetière Street
West, |
Matthew J. Warren |
16th Floor |
Sidley Austin LLP |
Montreal, QC H3B 2M9 |
1501 K Street, N.W. |
CANADA |
Washington, DC 20005 |
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(202) 736-8000 |
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ratkins@sidley.com |
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Kathryn J. Gainey |
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CN |
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601 Pennsylvania Ave, NW |
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Suite 500, North Building |
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Washington, DC 20004 |
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Kathryn.gainey@cn.ca |
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Counsel for Canadian National Railway Company,
Grand Trunk Corporation, and CN’s Rail Operating
Subsidiaries
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/s/ William A. Mullins |
Adam J. Godderz |
William A. Mullins |
Kansas City Southern |
Crystal M. Zorbaugh |
P.O. Box 219335 |
Baker & Miller PLLC |
Kansas City, MO 64121-9335 |
2401 Pennsylvania Avenue, Suite
300 |
(816) 983-1324 |
Washington, DC 20037 |
AGodderz@KCSouthern.com |
(202) 663-7823 |
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WMullins@bakerandmiller.com |
Counsel for Kansas City Southern, The Kansas City
Southern Railway Company, Gateway Eastern Railway Company, and
the Texas Mexican Railway Company
Dated: June 22, 2021
For more information about CN’s and KCS’ pro-competitive
combination, please visit www.ConnectedContinent.com.
About CNCN is a world-class transportation
leader and trade-enabler. Essential to the economy, to the
customers, and to the communities it serves, CN safely transports
more than 300 million tons of natural resources, manufactured
products, and finished goods throughout North America every year.
As the only railroad connecting Canada’s Eastern and Western coasts
with the U.S. South through a 19,500-mile rail network, CN and its
affiliates have been contributing to community prosperity and
sustainable trade since 1919. CN is committed to programs
supporting social responsibility and environmental stewardship.
About Kansas City
SouthernHeadquartered in Kansas City, Mo., Kansas City
Southern (KCS) (NYSE: KSU) is a transportation holding company that
has railroad investments in the U.S., Mexico and Panama. Its
primary U.S. holding is The Kansas City Southern Railway Company,
serving the central and south central U.S. Its international
holdings include Kansas City Southern de Mexico, S.A. de C.V.,
serving northeastern and central Mexico and the port cities of
Lázaro Cárdenas, Tampico and Veracruz, and a 50 percent interest in
Panama Canal Railway Company, providing ocean-to-ocean freight and
passenger service along the Panama Canal. KCS' North American rail
holdings and strategic alliances with other North American rail
partners are primary components of a unique railway system, linking
the commercial and industrial centers of the U.S., Mexico and
Canada. More information about KCS can be found
at www.kcsouthern.com.
Forward Looking
StatementsCertain statements included in this news release
constitute “forward-looking statements” within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
under Canadian securities laws, including statements based on
management’s assessment and assumptions and publicly available
information with respect to KCS, regarding the proposed transaction
between CN and KCS, the expected benefits of the proposed
transaction and future opportunities for the combined company. By
their nature, forward-looking statements involve risks,
uncertainties and assumptions. CN cautions that its assumptions may
not materialize and that current economic conditions render such
assumptions, although reasonable at the time they were made,
subject to greater uncertainty. Forward-looking statements may be
identified by the use of terminology such as “believes,” “expects,”
“anticipates,” “assumes,” “outlook,” “plans,” “targets,” or other
similar words.
Forward-looking statements are not guarantees of
future performance and involve risks, uncertainties and other
factors which may cause actual results, performance or achievements
of CN, or the combined company, to be materially different from the
outlook or any future results, performance or achievements implied
by such statements. Accordingly, readers are advised not to place
undue reliance on forward-looking statements. Important risk
factors that could affect the forward-looking statements in this
news release include, but are not limited to: the outcome of the
proposed transaction between CN and KCS; the parties’ ability to
consummate the proposed transaction; the conditions to the
completion of the proposed transaction; that the regulatory
approvals required for the proposed transaction may not be obtained
on the terms expected or on the anticipated schedule or at all;
CN’s indebtedness, including the substantial indebtedness CN
expects to incur and assume in connection with the proposed
transaction and the need to generate sufficient cash flows to
service and repay such debt; CN’s ability to meet expectations
regarding the timing, completion and accounting and tax treatments
of the proposed transaction; the possibility that CN may be unable
to achieve expected synergies and operating efficiencies within the
expected time-frames or at all and to successfully integrate KCS’
operations with those of CN; that such integration may be more
difficult, time-consuming or costly than expected; that operating
costs, customer loss and business disruption (including, without
limitation, difficulties in maintaining relationships with
employees, customers or suppliers) may be greater than expected
following the proposed transaction or the public announcement of
the proposed transaction; the retention of certain key employees of
KCS may be difficult; the duration and effects of the COVID-19
pandemic, general economic and business conditions, particularly in
the context of the COVID-19 pandemic; industry competition;
inflation, currency and interest rate fluctuations; changes in fuel
prices; legislative and/or regulatory developments; compliance with
environmental laws and regulations; actions by regulators; the
adverse impact of any termination or revocation by the Mexican
government of KCS de México, S.A. de C.V.’s Concession; increases
in maintenance and operating costs; security threats; reliance on
technology and related cybersecurity risk; trade restrictions or
other changes to international trade arrangements; transportation
of hazardous materials; various events which could disrupt
operations, including illegal blockades of rail networks, and
natural events such as severe weather, droughts, fires, floods and
earthquakes; climate change; labor negotiations and disruptions;
environmental claims; uncertainties of investigations, proceedings
or other types of claims and litigation; risks and liabilities
arising from derailments; timing and completion of capital
programs; and other risks detailed from time to time in reports
filed by CN with securities regulators in Canada and the United
States. Reference should also be made to Management’s Discussion
and Analysis in CN’s annual and interim reports, Annual Information
Form and Form 40-F, filed with Canadian and U.S. securities
regulators and available on CN’s website, for a description of
major risk factors relating to CN. Additional risks that may affect
KCS’ results of operations appear in Part I, Item 1A “Risks Related
to KCS’ Operations and Business” of KCS’ Annual Report on Form 10-K
for the year ended December 31, 2020, and in KCS’ other filings
with the U.S. Securities and Exchange Commission (“SEC”).
Forward-looking statements reflect information
as of the date on which they are made. CN assumes no obligation to
update or revise forward-looking statements to reflect future
events, changes in circumstances, or changes in beliefs, unless
required by applicable securities laws. In the event CN does update
any forward-looking statement, no inference should be made that CN
will make additional updates with respect to that statement,
related matters, or any other forward-looking statement.
No Offer or SolicitationThis
news release does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended.
Additional Information and Where to Find
ItIn connection with the proposed transaction, CN has
filed with the SEC a registration statement on Form F-4 to register
the shares to be issued in connection with the proposed
transaction. The registration statement includes a preliminary
proxy statement of KCS which, when finalized, will be sent to the
stockholders of KCS seeking their approval of the merger-related
proposals. The registration statement has not yet become effective.
This news release is not a substitute for the proxy statement or
registration statement or other documents CN and/or KCS may file
with the SEC or applicable securities regulators in Canada in
connection with the proposed transaction.
INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE PRELIMINARY PROXY STATEMENT, THE REGISTRATION STATEMENT, THE
PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC OR
APPLICABLE SECURITIES REGULATORS IN CANADA CAREFULLY IN THEIR
ENTIRETY IF AND WHEN THEY BECOME AVAILABLE (INCLUDING ALL
AMENDMENTS AND SUPPLEMENTS THERETO) BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT CN, KCS AND THE PROPOSED TRANSACTIONS.
Any definitive proxy statement(s), registration statement or
prospectus(es) and other documents filed by CN and KCS (if and when
available) will be mailed to stockholders of CN and/or KCS, as
applicable. Investors and security holders will be able to obtain
copies of these documents (if and when available) and other
documents filed with the SEC and applicable securities regulators
in Canada by CN free of charge through at www.sec.gov and
www.sedar.com. Copies of the documents filed by CN (if and when
available) will also be made available free of charge by accessing
CN’s website at www.CN.ca. Copies of the documents filed by KCS (if
and when available) will also be made available free of charge at
www.investors.kcsouthern.com, upon written request delivered to KCS
at 427 West 12th Street, Kansas City, Missouri 64105, Attention:
Corporate Secretary, or by calling KCS’ Corporate Secretary’s
Office by telephone at 1-888-800-3690 or by email at
corpsec@kcsouthern.com.
ParticipantsThis news release
is neither a solicitation of a proxy nor a substitute for any proxy
statement or other filings that may be made with the SEC and
applicable securities regulators in Canada. Nonetheless, CN, KCS,
and certain of their directors and executive officers and other
members of management and employees may be deemed to be
participants in the solicitation of proxies in respect of the
proposed transactions. Information about CN’s executive officers
and directors is available in its 2021 Management Information
Circular, dated March 9, 2021, as well as its 2020 Annual Report on
Form 40-F filed with the SEC on February 1, 2021, in each case
available on its website at www.CN.ca/investors/ and at
www.sec.gov and www.sedar.com. Information about KCS’
directors and executive officers may be found on its website at
www.kcsouthern.com and in its 2020 Annual Report on Form 10-K filed
with the SEC on January 29, 2021, available at
www.investors.kcsouthern.com and www.sec.gov. Additional
information regarding the interests of such potential participants
will be included in one or more registration statements, proxy
statements or other documents filed with the SEC and applicable
securities regulators in Canada if and when they become available.
These documents (if and when available) may be obtained free of
charge from the SEC’s website at www.sec.gov and from
www.sedar.com, as applicable.
Contacts:
Media: CNCanadaMathieu
GaudreaultCN Media Relations & Public Affairs(514)
249-4735Mathieu.Gaudreault@cn.caLongview Communications &
Public AffairsMartin Cej(403)
512-5730mcej@longviewcomms.caUnited
StatesBrunswick GroupJonathan Doorley / Rebecca Kral(917)
459-0419 / (917)
818-9002jdoorley@brunswickgroup.comrkral@brunswickgroup.com |
Investment Community: CNPaul
ButcherVice-PresidentInvestor Relations(514)
399-0052investor.relations@cn.caInvestment Community:
KCSAshley ThorneVice PresidentInvestor Relations(816)
983-1530athorne@kcsouthern.comMacKenzie Partners, Inc.Dan Burch /
Laurie Connell(212) 929-5748 / (212) 378-7071 |
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Media: KCSC.
Doniele CarlsonKCS Corporate Communications & Community
Affairs(816) 983-1372dcarlson@kcsouthern.comJoele Frank, Wilkinson
Brimmer KatcherTim Lynch / Ed Trissel(212) 355-4449 |
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