More than 130 Letters Urge STB to Reject CN's
Use of a Voting Trust
CP Remains Confident in Superior Status as
Only Viable Class 1 Combination with KCS
CALGARY, AB, June 1, 2021 /PRNewswire/ - Canadian Pacific
Railway Limited (TSX: CP) (NYSE: CP) ("CP") today announced that
more than 130 stakeholders have filed statements with the Surface
Transportation Board ("STB") requesting the STB reject Canadian
National's ("CN") proposed use of a voting trust. This brings the
total letters submitted to more than 960, including 250-plus
expressing concern about CN and Kansas City Southern's ("KCS")
combination, its use of a voting trust, or both, and more than 730
in support of CP-KCS.
The opposition letters – from a range of stakeholders including
shippers, ports, local governments, transportation associations and
other stakeholders – highlight the extensive risks the proposed
CN-KCS voting trust poses to competition by reducing shipper
options. Stakeholders also expressed strong concerns over the
likelihood of reduced service quality and infrastructure
investments as a result of the proposed CN transaction.
These concerns echo those of the Department of Justice ("DOJ"),
which on May 14 filed comments with
the STB objecting to CN's proposed use of a voting trust on the
grounds that a CN merger with KCS would pose greater risks to
competition than the CP-KCS agreement.
CN's recent announcement that it intends to "divest" KCS'
70-mile line between New Orleans
and Baton Rouge (but still retain
full operating rights) fails to address these concerns. For
example, this token divestment would not begin to address the
competitive issues in the rail corridors running north from
Louisiana and Mississippi through America's heartland, where
KCS and CN have historically competed; nor would it address many
shippers and stations that are today served by both KCS and CN in
markets like Omaha/Council Bluffs,
Jackson, MS, Springfield, IL, and St. Louis.
CP-KCS is the only viable Class 1 combination and has received
overwhelming support across the transportation supply chain. As
previously announced, CP intends to proceed with its STB
application process to acquire KCS. CP believes that pursuing its
application is in the best interests of both KCS and the public so
that the pro-competitive CP-KCS transaction can proceed to be
reviewed by the STB and – in the event KCS' agreement with CN is
terminated or CN is otherwise unable to acquire control of KCS – a
potential acquisition of KCS by CP could be implemented without
undue delay.
Importantly, the STB has already approved CP's use of a voting
trust and affirmed KCS' waiver from the new rail merger rules it
adopted in 2001 because a CP-KCS combination is truly end-to-end
and pro-competitive. CP stands ready to reengage with KCS.
For more information on the transaction and the benefits it is
expected to bring to the full range of stakeholders, visit
FutureForFreight.com.
FORWARD-LOOKING STATEMENTS AND INFORMATION
This news release includes certain forward-looking statements
and forward looking information (collectively, FLI). FLI is
typically identified by words such as "anticipate", "expect",
"project", "estimate", "forecast", "plan", "intend", "target",
"believe", "likely" and similar words suggesting future outcomes or
statements regarding an outlook. All statements other than
statements of historical fact may be FLI.
Although we believe that the FLI is reasonable based on the
information available today and processes used to prepare it, such
statements are not guarantees of future performance and you are
cautioned against placing undue reliance on FLI. By its
nature, FLI involves a variety of assumptions, which are based
upon factors that may be difficult to predict and that may involve
known and unknown risks and uncertainties and other factors which
may cause actual results, levels of activity and achievements to
differ materially from those expressed or implied by these FLI,
including, but not limited to, the following: changes in business
strategies and strategic opportunities; estimated future dividends;
financial strength and flexibility; debt and equity market
conditions, including the ability to access capital markets on
favourable terms or at all; cost of debt and equity capital;
potential changes in the CP share price; the ability of management
of CP, its subsidiaries and affiliates to execute key priorities;
general North American and global social, economic, political,
credit and business conditions; risks associated with agricultural
production such as weather conditions and insect populations;
the availability and price of energy commodities; the effects
of competition and pricing pressures, including competition from
other rail carriers, trucking companies and maritime shippers in
Canada and the U.S.; North
American and global economic growth; industry capacity; shifts in
market demand; changes in commodity prices and commodity demand;
uncertainty surrounding timing and volumes of commodities being
shipped via CP; inflation; geopolitical instability; changes in
laws, regulations and government policies, including regulation of
rates; changes in taxes and tax rates; potential increases in
maintenance and operating costs; changes in fuel prices; disruption
in fuel supplies; uncertainties of investigations, proceedings or
other types of claims and litigation; compliance with environmental
regulations; labour disputes; changes in labour costs and labour
difficulties; risks and liabilities arising from derailments;
transportation of dangerous goods; timing of completion of capital
and maintenance projects; sufficiency of CP's budgeted capital
expenditures in carrying out CP's business plan; services and
infrastructure; the satisfaction by third parties of their
obligations to CP; currency and interest rate fluctuations;
exchange rates; effects of changes in market conditions and
discount rates on the financial position of pension plans and
investments; trade restrictions or other changes to international
trade arrangements; the effects of current and future multinational
trade agreements on the level of trade among Canada and the U.S.; climate change and the
market and regulatory responses to climate change; anticipated
in-service dates; success of hedging activities; operational
performance and reliability; regulatory and legislative decisions
and actions; public opinion; various events that could disrupt
operations, including severe weather, such as droughts, floods,
avalanches and earthquakes, and cybersecurity attacks, as well as
security threats and governmental response to them, and
technological changes; acts of terrorism, war or other acts of
violence or crime or risk of such activities; insurance coverage
limitations; and the pandemic created by the outbreak of COVID-19
and resulting effects on CP's business, operating results, cash
flows and/or financial condition, as well as resulting effects on
economic conditions, the demand environment for logistics
requirements and energy prices, restrictions imposed by public
health authorities or governments, fiscal and monetary policy
responses by governments and financial institutions, and
disruptions to global supply chains.
We caution that the foregoing list of factors is not exhaustive
and is made as of the date hereof. Additional information about
these and other assumptions, risks and uncertainties can be
found in reports and filings by CP with Canadian and U.S.
securities regulators. Reference should be made to "Risk Factors"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Forward-Looking Statements" in CP's
annual and interim reports on Form 10-K and 10-Q. Due to the
interdependencies and correlation of these factors, as well as
other factors, the impact of any one assumption, risk or
uncertainty on FLI cannot be determined with certainty.
Except to the extent required by law, we assume no obligation to
publicly update or revise any FLI, whether as a result of new
information, future events or otherwise. All FLI in this news
release is expressly qualified in its entirety by these cautionary
statements.
ABOUT CANADIAN PACIFIC
Canadian Pacific (TSX: CP) (NYSE: CP) is a transcontinental
railway in Canada and the United States with direct links to major
ports on the west and east coasts. CP provides North American
customers a competitive rail service with access to key markets in
every corner of the globe. CP is growing with its customers,
offering a suite of freight transportation services, logistics
solutions and supply chain expertise. Visit www.cpr.ca to see the
rail advantages of CP. CP-IR
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SOURCE Canadian Pacific