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FOR IMMEDIATE RELEASE |
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CN AND BNSF AGREE TO TERMINATE COMBINATION —
CITE UNCERTAINTY AND RISK IN WAITING UP TO 2½ YEARS FOR
FINAL STB DECISION ON TRANSACTION
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MONTREAL and FORT
WORTH, Texas, July 20, 2000—Canadian National
Railway Company (NYSE: CNI; TSE: CNR)
(CN) and Burlington Northern Santa Fe Corporation (NYSE: BNI) (BNSF) announced
today that their Boards of Directors have both voted to approve an immediate,
mutual termination of the combination agreement that would have created North
American Railways, Inc., after carefully considering the implications for
customers, employees and shareholders. |
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Paul M. Tellier, president and chief executive officer of
CN, and Robert D. Krebs, chairman and chief executive officer of BNSF, said:
"CN and BNSF are both shareholder-driven organizations, and we have concluded
it is not in the interests of our shareholders to assume the risks involved in
waiting up to 2½ years for a decision
on our transaction by the regulator in the United States." |
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| The Surface Transportation Board (STB) imposed a 15-month
moratorium on new rail mergers on March 17, 2000, while it prepares new rail
merger guidelines. The moratorium, upheld by the United States Court of Appeals
for the District of Columbia Circuit in a ruling on July 14, 2000, prevents CN
and BNSF from filing a common control application with the STB until mid-June
2001 at the earliest. As a result, a regulatory decision on the CN/BNSF
combination would be unlikely before late 2002. |
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| Tellier said: "We had looked forward to creating a company
that could have been the leader in every aspect of the rail industry. But the
delay and uncertainty caused by the STB's moratorium and proposed rule making
made it impossible for us to continue with our combination efforts." |
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| Krebs said: "It is with regret that we give up on our
efforts to create North American Railways. The service we would have provided
our customers across a 50,000-mile network would have been unparalleled, and the US$800
million (C$1.2 billion) per year of synergies we identified as we prepared our
combination case could have provided significant benefits to both companies."
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| Tellier and Krebs said: "CN and BNSF intend to continue to
strengthen the ties that have been established between the two companies, and
to capture, to the extent that they can be realized by separate entities, the
improvements and efficiencies that were identified as part of the combination
preparation." |
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| No break-up fees will arise from the termination of the
CN/BNSF combination agreement because the companies have mutually agreed to
unwind their transaction. |
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| CN and BNSF announced their proposed
combination through
North American Railways on Dec. 20, 1999. |
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| Canadian National Railway Company spans Canada and
mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico,
serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New
Orleans, and Mobile, Ala., and key cities of Toronto, Buffalo, Chicago,
Detroit, Memphis, St. Louis, and Jackson, Miss., with connections to all points
in North America. |
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| Through its
subsidiary, The Burlington Northern and Santa Fe Railway Company, BNSF,
headquartered in Fort Worth, Texas, operates one of the largest rail networks
in North America, with 33,500 route miles of track covering 28 states and two
Canadian provinces. |
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