CN
TSX : CNR
NYSE : CNI

CN

October 30, 2007 17:45 ET

CN files application with U.S. Surface Transportation Board seeking regulatory approval to acquire the major portion of the Elgin, Joliet & Eastern Railway Company

WASHINGTON, DISTRICT OF COLUMBIA--(Marketwire - Oct. 30, 2007) - CN (TSX:CNR)(NYSE:CNI) today filed with the United States Surface Transportation Board (STB) its application seeking regulatory authorization to acquire the principal rail lines of the Elgin, Joliet & Eastern Railway Company (EJ&E).

CN and United States Steel Corporation announced Sept. 26, 2007, an agreement under which CN will acquire most of the EJ&E for US$300 million, subject to STB approval. The railroad operations to be acquired by CN will become the EJ&EW West Company (EJ&EW). CN is asking the STB to consider its EJ&EW acquisition as a minor transaction, which would permit the Company to assume control of the EJ&EW in mid-2008. Upon STB approval, EJ&EW would assume the EJ&E name and reporting marks.

CN's STB application describes the public benefits of the transaction, the absence of any competitive harm from it, the minimal labor impacts and the overall positive regional environmental impacts flowing from the transaction, and plans for a straightforward integration of CN and EJ&EW operations.

In his verified statement filed in connection with CN's STB application, CN President and Chief Executive Officer E. Hunter Harrison said: "The EJ&EW transaction would promote the public interest in a more efficient and reliable rail transportation system and would have no adverse competitive or safety effects. The EJ&E lines CN plans to acquire are a strategically important link in our network, and acquiring them would allow us to dramatically increase the efficiency of both our own operations and those of other carriers in Chicago."

The EJ&EW would provide the "missing link" to connect CN's five existing lines entering Chicago, filling a void in its network that has caused the Company delays and higher costs. The acquisition would result in improved reliability and service to both CN and EJ&EW customers.

CN said in its STB filing that the transaction would reduce rail traffic congestion in Chicago's inner core and increase rail capacity for carriers operating in the city by dispersing CN trains along the EJ&E arc on the periphery of the Chicago metropolitan area. The public would also benefit from CN's plan to spend approximately US$100 million to upgrade the EJ&EW's infrastructure.

The transaction would advance the broad objectives of the Chicago Region Environmental and Transportation Efficiency Program (CREATE) and make it possible for the City of Chicago to realize its goals with respect to seeing trains vacate CN's St. Charles Air Line more quickly than under CREATE's Central Corridor scenario. Moreover, CN's use of private investment to produce re-routing benefits in the near term would save taxpayer dollars, and lessen community disruption and dislocation that would be associated with construction of the CREATE Central Corridor. CN will also work closely with Metra and AMTRAK on commuter- and passenger-rail operations.

CN said the overall environmental effect of the EJ&EW transaction would benefit the greater Chicago metropolitan area, and that the re-routing of its trains from the City's inner core to the outskirts of Chicago would reduce the railroad's total environmental impact in the region. CN expects that more efficient movement of its trains would improve fluidity and lead to fewer interruptions and less interference with vehicular traffic in the urban core.

CN is now engaged in preliminary discussions with communities on the EJ&E that would see increased rail traffic as a result of the transaction, and will work with these communities to jointly find ways of addressing any specific concerns.

An electronic version of CN's STB application is available by clicking on CN STB application (http://www.cn.ca/about/media/media_updates/en_NewsMediaupdate.shtml).

This news release contains forward-looking statements. CN cautions that, by their nature, forward-looking statements involve risk, uncertainties and assumptions, and while there may be a risk of recession in the United States economy, the Company's assumption is that positive economic conditions in North America and globally will continue, which assumption may not materialize, and that its results could differ materially from those expressed or implied in such statements. Important factors that could cause such differences include, but are not limited to, industry competition, legislative and/or regulatory developments, compliance with environmental laws and regulations, various evens which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, the effects of adverse general economic and business conditions, inflation, currency fluctuations, changes in fuel prices, labour disruptions, environmental claims, investigations or proceedings, other types of claims and litigation, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to CN's most recent Form 40-F filed with the United States Securities and Exchange Commission, its Annual Information Form filed with the Canadian securities regulators, and its 2006 Annual Consolidated Financial Statements and Notes thereto and Management's Discussion and Analysis (MD&A), for a summary of major risks.

CN - Canadian National Railway Company and its operating railway subsidiaries - 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 the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America. For more information on CN, visit the company's website at www.cn.ca.

www.cn.ca

Contact Information

  • CN
    Mark Hallman (Media)
    Director, Communications, Media & Eastern Region
    (905) 669-3384
    or
    CN
    Jim Kvedaras
    Senior Manager, U.S. Government & Public Affairs
    (708) 332-3508