12 May 2009
Canadian Pacific Commences US$300 Mln Debt Offering
Calgary Alberta - Canadian Pacific Railway Ltd.
said Tuesday morning that its wholly-owned subsidiary, Canadian Pacific Railway Co., has commenced an offering of US$300
million of 10-year notes. The company plans to use the net proceeds from the offering to partially finance the repurchase
of certain of its outstanding U.S. dollar denominated long-term debt securities pursuant to a tender offer announced
Tuesday. The balance amount, if any, is intended to be used for general corporate purposes.
Canadian Pacific Railway Co. has also commenced a cash tender offer to purchase up to US$450 million of its outstanding notes. These
include 6.25% notes maturing in October 2011, 5.75% notes due May 2013, and 6.50% notes due May 2018. The offer is part of the
company's efforts to enhance its capital structure and improve its debt maturity profile.
The company noted that the 2013 notes as well as the 2018 notes were issued in May 2008 to repay a portion of the company's
indebtedness incurred to acquire Dakota, Minnesota & Eastern Railroad Corp, or DM&E. The company has about $4.79 billion in
long-term debt, of which $65.3 million is due within a year.
The company said that holders of securities that are validly tendered and not validly withdrawn on or before the early tender date of
27 May 2009, and accepted for purchase will receive the full tender offer consideration. Holders of securities that are
validly tendered after 27 May 2009 but on or before the expiration date of 10 Jun 2009 and accepted for
purchase will receive the full tender offer consideration minus an amount in cash equal to US$30 for each US$1,000 principal amount of
securities.
In April, Canadian Pacific reported a 31% decline in profit for the first quarter to $62.5 million from $90.7 million, in the
year-ago quarter. On a per share basis, earnings for the quarter declined to $0.39 from $0.59 in the same period last
year. Revenues for the quarter were $1.07 billion, down 6.9% from $1.15 billion in the year-ago period. The results for
the quarter reflected declining freight-traffic volume. Canadian Pacific has been particularly hard-hit
because of its significant exposure to fertilizer and coal.
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