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CONRAIL INC.
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[Press Release]
FOR IMMEDIATE RELEASE
January 13, 1997
Media Contact: Robert Fort
757-629-2710
NORFOLK SOUTHERN TO BUY 9.9% OF CONRAIL
IF SHAREHOLDERS VOTE AGAINST 'OPT OUT' PROPOSAL
NORFOLK, VA - Norfolk Southern Corporation (NYSE: NSC) today announced
that it will buy Conrail common and ESOP preferred shares representing
9.9 percent of Conrail's outstanding common shares for $115 per share if
Conrail shareholders defeat proposals on Friday (January 17) that would
force them to accept an inferior offer from CSX Corp.
The Norfolk Southern proposal is contingent only on the defeat
of Conrail management proposals asking shareholders to "opt out" of the
fair value provision of Pennsylvania anti-takeover statute and to allow
Conrail management to adjourn the special shareholder meeting scheduled
for Friday.
After shareholders vote against the proposals, Norfolk Southern
said it will promptly amend its existing all-cash tender offer in order
to buy about 8.2 million Conrail shares. This represents the maximum
number of shares that Norfolk Southern can buy without triggering
Conrail's 'poison pill.'
The 9.9 percent offer would not be subject to termination of the
merger agreement between Conrail and CSX and would not require any
action by Conrail's Board of Directors.
Norfolk Southern said it would promptly begin a second all-cash
tender offer for all the remaining Conrail common shares and ESOP
preferred shares at $115 a share after it completes the 9.9 percent
tender offer.
The terms and conditions of the second tender offer would
essentially be the same as those in Norfolk Southern's current all-cash
offer of $115 per share, which is worth $15 per share or about 15
percent more than CSX's cash-and-stock proposal.
"Our proposal again demonstrates our commitment to Conrail
shareholders and our determination to see that they get an excellent
price for their shares," said David R. Goode, Norfolk Southern's
Chairman, President and Chief Executive Officer. "It underscores Norfolk
Southern's determination to see this battle through and get a fair value
for Conrail shareholders and a sound result for all constituencies.
"Our proposal makes two things possible -- the best deal for
shareholders and the best combined railroad --despite the unprecedented
obstructions that Conrail and CSX have put in shareholders' path," Goode
said. "Conrail shareholders have an opportunity to reassert control over
their corporation and reject the coercive tactics being used to pressure
them into approving CSX's inferior offer."
Norfolk Southern said a vote to reject the CSX/Conrail scheme
would signal the beginning of the process to unseat Conrail directors at
Conrail's next annual meeting.
Norfolk Southern also noted that the Surface Transportation
Board has made clear that it would not be prevented from approving
Norfolk Southern's proposal to acquire Conrail despite the "lock-out"
provision in the Conrail-CSX merger agreement. The Board, in a decision
last Thursday, said "the lock-out provision would in no way preclude
Board approval...of an NS/Conrail merger...or the consummation of such a
merger if approved."
The practical consequence for Conrail shareholders is
significant. On the procedural schedule anticipated by the STB, the
merger case will be decided late this year or early in 1998, and that
decision, the Board said, would void any lock-out clause that conflicts
with its decision. Consequently, the "lock-out" will cease to have any
practical effect at least a year earlier than CSX would have
shareholders believe.
Norfolk Southern is a Virginia-based holding company with
headquarters in Norfolk, Va. It owns a major freight railroad, Norfolk
Southern Railway Company, which operates 14.500 miles of road in 20
states, primarily in the Southeast and Midwest, and the Province of
Ontario, Canada. The corporation also owns North American Van Lines,
Inc., and Pocahontas Land Corporation, a natural resources company.
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