Montreal Quebec - CN and KCS today announced that they have jointly filed with the Surface Transportation Board (STB) certain documents requested by the STB in its 8 Jun 2021 Decision in STB Finance Docket No. 36514 to enable the STB to review the voting trust in connection with the definitive Merger Agreement between CN and KCS.
 
These documents include:

• Written opinions of the financial advisors referenced in Section 4.16 of the Merger Agreement;
   
  
• Debt Commitment Letters referenced in Section 4.17(a) of the Merger Agreement, including all exhibits and schedules;
   
  
• Section 5.1 of the Company Disclosure Schedules referenced in Section 5.1(a) of the Merger Agreement, together with any other section(s) of the Company Disclosure Schedules that pertain to the Company Capital Allocation Policy referenced in Section 5.1(a) of the Merger Agreement and/or the KCS pre-existing capital allocation policy referenced in Applicants' May 26 Motion.>

With this filing, CN and KCS are one step closer to creating the premier railway for the 21st century.
 
CN and KCS look forward to the STB's review and are confident that their voting trust will be approved.
 
In response to the STB's request for information about KCS's pre-existing capital allocation policy, CN and KCS also submitted to the STB a Verified Statement from KCS Chief Financial Officer Michael W. Upchurch.
 
In his statement, Mr. Upchurch comments:
 
"The Board should expeditiously approve the CN voting trust. It is the same as the already approved CP trust. It has the same trustee. The Merger Agreement provides KCS with financial flexibility and freedom to undertake its capital and maintenance plans. Further, over 1,400 stakeholders have supported the CN/KCS combination so far."
 
Mr. Upchurch's statement emphasizes the financial strength of KCS and its capital investment plans during the trust period:
 
KCS is financially strong.
 
"KCS compares very favorably to other Class I railroads in almost every important financial measure including revenue growth, operating ratio, EBITDA, EPS growth, free cash flow yields, debt leverage ratio, liquidity, interest coverage ratio, and funds from operations to debt ratio. Today, KCS generates substantially more cash flow than is required for our annual investment needs. We have more than sufficient access to capital to fund our three year capital investment plan."
 
CN/KCS Merger Agreement provides KCS with continued flexibility to undertake its capital investment plans.
 
"The Merger Agreement provides KCS with financial flexibility and freedom to undertake its capital and maintenance plans. The Merger Agreement is designed to preserve KCS's pre-existing capital allocation policies during the trust period. It is also designed to ensure that during the trust period KCS will continue to have the freedom and the resources to pursue its existing and robust capital expenditure program without interference from CN. During the trust period, KCS will have substantial cash, liquidity, and access to capital markets not only to meet our planned investment requirements consistent with the plan approved by our Board of Directors previous to any merger agreement with either CP or CN, but also the ability to far exceed that plan if it is necessary to do so."
 
As stated in the STB filing, the CN/KCS voting trust has been designed to ensure KCS's independence and freedom of action during the trust period, and to give CN and KCS the opportunity during the trust period to demonstrate the merits of the CN/KCS combination, which will enhance competition, strengthen the North American rail network, and provide better service and more choice for CN and KCS customers.
 
CN and KCS look forward to reviewing further public comments and engagement during the STB's official public comment period, which will be open until 28 June 2021.
 
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