CN voting trust is not in the public interest;
its approval would pre-judge STB review, harm competition, risk CN
shifting financial burdens to shippers, and pave the way for
additional U.S. rail consolidation
The next 20 days will determine
the course of competition for U.S. railroading and North American
commerce for the next 150 years
CALGARY, AB, June 8, 2021 /CNW/ - Canadian Pacific
Railway Limited (TSX: CP) (NYSE: CP) ("CP") today issued the
following statement in response to the Surface Transportation
Board's ("STB") schedule calling for comments by June 28 on Canadian National's ("CN") use of a
voting trust in connection with its proposed combination with
Kansas City Southern ("KCS"):
CP looks forward to the STB's review of CN's proposed voting
trust under the 2001 merger rules. As noted previously by the STB,
voting trusts are a "privilege, not a right" and "should not be
used routinely, but rather should be available only for those rare
occasions when their use would be beneficial." Accordingly,
before CN is allowed to use a voting trust, the STB must decide
that "the proposed use of a voting trust in a potential CN-KCS
transaction is 'consistent with the public interest'" based on
consideration of "both the potential benefits and costs of such
use."
No later than June 28, as spelled
out in today's schedule, CP plans to file comments explaining why
the public interest costs of CN's proposed voting trust outweigh
the non-existent benefits. We look forward to fully
participating in this public interest review along with other
concerned stakeholders from across the transportation supply
chain. More than 130 shippers, communities, labor
organizations, and other stakeholders have already communicated
opposition to CN's voting trust proposal directly to the STB.
The next 20 days, and the STB's subsequent deliberations, will
determine the course of competition for U.S. railroading and North
American commerce for the next 150 years.
CP remains confident that the STB will ultimately reject CN's
proposal to use a voting trust. Allowing CN to close into trust
would not be in the public interest because its approval would
pre-judge STB review, harm competition, risk CN shifting financial
burdens to shippers, and pave the way for additional U.S. rail
consolidation. CN's arguments in favor of a trust amount to
the claim that CN and KCS should be able to decide what is in the
public interest based on which railroad is offering more money to
acquire KCS – that argument elevates private interests over the
public interest.
The Department of Justice ("DOJ") raised serious competitive
concerns about CN's proposed voting trust on May 14, contending that "the Board should not
permit the proposed CN voting trust because CN's proposed
acquisition of KCS appears to pose greater risks to competition
than the risks posed by a CP-KCS merger." The DOJ further stated
that "threats to competition would be present immediately after the
CN voting trust is consummated." These threats cannot be
overcome by the divestiture CN has proposed because that
divestiture would be both too narrow and too late – coming only
after the voting trust period would have
ended.
Because CN's agreement with KCS may not be capable of
consummation, CP is proceeding with preparing our full
merger application seeking authority from the STB to acquire
control of KCS. The STB has already approved CP's use of a voting
trust and affirmed the application of the pre-2001 merger rules
because a CP-KCS combination is truly end-to-end and
pro-competitive.
CP maintains that a CP-KCS combination is the only viable Class
1 merger that serves the best interests of customers and
stakeholders, but also the continent's rail network to enable a new
corridor of investment and capacity for the North American economy
to grow.
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