CN argument at close of public comment period fails to
present convincing case that voting trust is in public
interest
CALGARY, AB, July 7, 2021 /PRNewswire/ - Canadian Pacific
Railway Limited (TSX: CP) (NYSE: CP) today issued the following
statement in response to Canadian National's ("CN") filing with the
Surface Transportation Board ("STB") replying to the many comments
opposing CN's proposed voting trust:
CN's reply doubles down on arguments for a voting trust that CP
has already shown do not meet the Board's public interest test and
sweeps under the rug the many public interest costs associated with
CN's proposed use of a trust.
CN continues to try to limit the STB's discretion to determine
what is in the public interest, repeating its flawed rhetoric about
the Board's "narrow test" and asserting that concerns raised by
"rail labor, communities and passenger rail…are not relevant to
this voting trust decision." CN also repeats its false assertion
that CN and CP are "identically situated" with respect to the
relevant public interest factors, despite the fundamental
differences in the public interest implications of their proposals
that have already led the STB to subject the CN proposal to the
2001 merger rules and the elevated public test for voting trusts,
pursuant to which approval shall be the "rare" exception rather
than the routine.
CP looks forward to the Board's decision on CN's proposal, which
will mark the next milestone in CP's ability to present the CP/KCS
alternative, which offers all the same benefits and more without
any of the competitive and other costs of a CN acquisition of
KCS.
CN's reply falsely asserts that there is "no CP transaction" and
that the Board would not "contrast" the CN transaction with a
"hypothetical" CP/KCS transaction in any event. CN misses the point
entirely: CP would not be asking the Board to "prefer" a CP/KCS
transaction over a CN/KCS one, but merely revealing that the
purported benefits CN is claiming for its own proposal should not
be credited because they can be obtained in ways that do not harm
the public interest. Though that lens, the CN/KCS deal should not
be approved.
CP looks forward to offering KCS shareholders a realistic,
achievable and ultimately superior path to realize the value of
their stake in this proud company. On close inspection, CN's
bid remains truly illusory.
CP-KCS remains the only viable Class 1 combination
CP filed comments with the STB on June
28 outlining why the public interest costs of CN's proposed
voting trust outweigh the non-existent benefits. With the public
comment period closed, STB's subsequent deliberations will
determine the course of competition for U.S. railroading and North
American commerce for the next 150 years.
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,
pro-competitive, and the only viable Class 1 combination.
As previously announced, CP is continuing to pursue its
application process to acquire KCS so that the pro-competitive
CP-KCS combination can be reviewed by the STB and implemented
without undue delay, in the event KCS' agreement with CN is
terminated or CN is otherwise unable to acquire control of KCS.
For more information on the benefits of a CP-KCS combination and
the risks that a CN-KCS transaction would pose to the railway
industry and North America,
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