Stakeholders from the Upper Midwest to Gulf
Coast Among List of 330-plus Saying CN-KCS Combination Would Reduce
Shipping Options
CALGARY, AB, June 24, 2021 /PRNewswire/ - Canadian
Pacific Railway Limited (TSX: CP) (NYSE: CP) ("CP") today announced
that grain and other shippers across North Dakota, South
Dakota and Minnesota have
submitted letters to the Surface Transportation Board ("STB")
opposing Canadian National ("CN") and Kansas City Southern's
("KCS") combination, its use of a voting trust, or both.
The economy in the U.S. Upper Plains depends on agriculture and
80 percent of the grain leaving the region moves by rail. The
letters describe how a potential CN-KCS combination and its
proposed use of a voting trust would see reduced options for
agricultural shippers in the Upper Midwest leaving them fewer
direct competitive options, and eliminating the new network of
shipping options a CP-KCS combination would create.
Excerpts from the letters written by agriculture industry
associations representing hundreds of farmers, grain elevator
operators, and other agribusinesses involved in grain, feed,
fertilizer and farm supply products included:
- "…CN would get stronger by absorbing KCS's system, much of
which is broadly parallel to CN's existing U.S. network. This
implies rationalization of assets, not investment in new
competitive routes. And it implies a loss of competitive options –
both concrete multi-railroad access to individual shippers and more
subtle benefits of having multiple railroads near one another to
serve as 'geographically competitive' options for transload
shipments, grain moving to alternate elevators/terminals, build-ins
and build-outs, and other means." -- North Dakota Grain Growers
Association
- "The costs of allowing a voting trust here, however are quite
significant…First, from our perspective, the most significant cost
associated with allowing CN to use a voting trust to complete its
acquisition of KCS is the adverse impact that would have on
existing competition between KCS and CN." -- Minnesota Grain
& Feed Association
- "Ultimately, we agree with the U.S. Department of Justice's
observation that 'threats to competition would be present
immediately after the CN voting trust is consummated.'" -- South
Dakota Grain & Feed
Association
On Monday, June 21, CP submitted
letters to the STB on behalf of concerned stakeholders across
North America, bringing the total
letters and statements expressing concern about CN or the use of a
voting trust to more than 330. That includes shippers that could
lose shipping options in the New
Orleans to Baton Rouge
corridor if CN's voting trust is approved.
Public Comment Period for CN Voting Trust
In line with the public comment period for CN's proposed voting
trust, CP plans to file comments no later than June 28, explaining why the public interest costs
of CN's proposed voting trust outweigh the non-existent benefits.
This public comment period, 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.
Now is the time for stakeholders to voice their concerns about
whether CN should be able to lock in its anti-competitive plan to
buy KCS via a voting trust. Stakeholders can express their concerns
directly to the STB.
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
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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,
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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