Purchase adds QRC's core Ontario, Quebec and New Brunswick rail properties to CN's network MONTREAL, Nov. 3 /PRNewswire-FirstCall/ -- CN announced today the acquisition of the three principal railway subsidiaries of the Quebec Railway Corp. (QRC) and a QRC rail-freight ferry operation for $C49.8 million. Under the transaction, CN is purchasing 540 track miles of rail line it formerly owned in eastern Ontario, eastern Quebec and northern New Brunswick, as well as a ferry service on the St. Lawrence River in eastern Quebec. CN sold the rail lines to QRC in the late 1990s and has held a minority equity interest in the ferry operation since its start-up in 1975. E. Hunter Harrison, president and chief executive, said: "The operations we're buying are important to CN because QRC is our second-largest short-line partner, serving important customers at origin and directly feeding our main-line network. QRC has done a great job with these rail properties, and we believe can improve on that in future. With CN's industry-leading operating model and track record of seamlessly integrating acquisitions, we expect to realize meaningful operating efficiencies from the addition of these properties to our network." Pierre Martin, chairman of QRC, said: "We are pleased to have reached agreement with CN on the sale of these three rail subsidiaries and ferry operation. With our close partnership over the years, CN was the logical purchaser of these properties after QRC decided to dispose of key assets. We believe CN will build on our sustained customer focus to deliver even better service in future." The QRC properties CN is purchasing are the: - Chemin de fer de la Matapedia et du Golfe (CFMG) CFMG has 221 miles of track, interchanging with CN at Riviere-du-Loup, Que. It runs from Riviere-du-Loup to Campbellton, N.B., where it meets QRC's New Brunswick East Coast Railway. CFMG also has a line between Mont-Joli and Matane, Que., where a rail ferry operates to the north shore of the St. Lawrence River. CFMG serves major shippers of aluminum, paper and forest products. VIA Rail Canada Inc. uses the line between Riviere-du-Loup and Campbellton for its Maritime service between Montreal and Halifax. - New Brunswick East Coast Railway (NBEC) The NBEC runs between Campbellton and Pacific Junction near Moncton, N.B. It is 196 miles long and interchanges with CN at Moncton Yard. In tandem with CFMG, the NBEC serves major shippers mainly in the mining and pulp and paper industries. VIA Rail uses the line between Campbellton and Pacific Junction for its Montreal-Halifax service. - Ottawa Central Railway (OCR) The OCR runs between Coteau, Que., where it interchanges with CN, and Pembroke, Ont. It also serves Hawkesbury, Ont. Between Coteau and Ottawa, the OCR operates over VIA Rail trackage. Major commodities carried by the OCR include newsprint, salt, forest products, steel wire rod and billets. - Compagnie de gestion de Matane inc. (COGEMA) COGEMA provides shuttle boat-rail freight service on the St. Lawrence River between Matane and Baie-Comeau, Que., and other ports on the North Shore of the Gulf of St. Lawrence when required. The rail ferry has a capacity of 25 rail cars. CFMG connects with the ferry at Matane and interchanges traffic with CN at Riviere-du-Loup. CN will invest capital over the next three years to upgrade the rail lines of the acquired properties, and will replace the existing locomotive fleet with more modern motive power. Post-transaction, it will be "business as usual" under CN ownership, with no immediate changes in freight, VIA Rail passenger rail service or employment levels. The QRC lines being acquired by CN employ approximately 214 persons. CN will assume the operation and management contract for the Chemin de fer de la Gaspesie, which runs from Matapedia to Gaspe, Que. Excluded from the transaction are QRC's Sydney Coal Railway Inc. subsidiary in Sydney, N.S., and its Chemin de fer de Charlevoix inc. (CFC) unit running east of Quebec City to Clermont, Que. To view a map of the operations CN is acquiring, click on http://files.newswire.ca/761/CFQ.e.pdf. Forward-Looking Statements This news release contains forward-looking statements. CN cautions that, by their nature, forward-looking statements involve risk, uncertainties and assumptions. Implicit in these statements, particularly in respect of growth opportunities, is the Company's assumption that such growth opportunities extend beyond business cycle considerations and, as such, are less affected by the current situation in the North American and global economies. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, reasonable at the time they were made, subject to greater uncertainty. The current situation in financial markets is adding a substantial amount of risk to the North American economy, which is currently experiencing recessionary conditions, and to the global economy, which is already slowing down. Under these circumstances, it is difficult to make a projection in respect of business prospects for the next 12 to 18 months. The Company cautions that its results could differ materially from those expressed or implied in such forward-looking 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 events 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, labor 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 "Management's Discussion and Analysis" in CN's annual and interim reports and Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN's website, for a summary of major risks. CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related matters, or any other forward-looking statement. 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, and Jackson, Miss., with connections to all points in North America. For more information on CN, visit the company's website at http://www.cn.ca/. DATASOURCE: CN CONTACT: Media: Julie Senecal, Manager, Public & Government Affairs, (514) 399-4048 (office), (514) 239-3331 (cellular); Investment Community: Robert Noorigian, Vice-President, Investor Relations, (514) 399-0052

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