The information in this preliminary
prospectus supplement is not complete and may be changed. This preliminary prospectus supplement and the accompanying prospectus are not
an offer to sell these securities and are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale
is not permitted.
Interest on the %
Notes due 20 (the “20
Notes”) and on the % Notes due 20
(the “20 Notes” and, together with the 20
Notes, the “Offered Notes”) offered under this prospectus supplement is payable semi-annually on
and of each year, commencing on , 2023.
The Offered Notes are redeemable, in whole or in part, at the option of Canadian National Railway Company at any time and from time
to time, upon not less than 15 nor more than 60 days’ notice, at the applicable redemption price and subject to the
conditions set forth herein. See “Description of Offered
Notes — Optional Redemption”.
The Offered Notes will be senior unsecured,
general obligations of the Company and will rank equally with all of the Company’s existing and future senior unsecured
indebtedness. The Offered Notes will not have the benefit of any guarantees and will be structurally subordinated to obligations of
the Company’s subsidiaries. See “Description of Offered Notes — General”.
The underwriters are offering the Offered Notes
subject to various conditions. See “Underwriting”. The underwriters expect to deliver the Offered Notes to purchasers
in book-entry form only through the facilities of The Depository Trust Company and its direct and indirect participants, including Euroclear
Bank N.V./S.A. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream”), on
or about , 2022.
In connection with the offering of the Offered
Notes, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the Offered Notes. Such
transactions, if commenced, may be discontinued at any time. See “Underwriting”. Each of the underwriters is an affiliate
of a bank which is a member of a syndicate of financial institutions that has made available to the Company credit facility arrangements.
Accordingly, under applicable Canadian securities laws, the Company may be considered a “connected issuer” of such underwriters
within the meaning of National Instrument 33-105 — Underwriting Conflicts. See “Underwriting”.
An investment in the Offered Notes is subject
to certain risks that should be carefully considered by prospective investors before purchasing the Offered Notes. See “Risk Factors”
in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference in this prospectus supplement
and in the accompanying prospectus.
This document is in two parts.
The first part is this prospectus supplement, which describes the specific terms of the Offered Notes and also adds to and updates certain
information contained in the accompanying short form base shelf prospectus and the documents incorporated by reference therein. The second
part is the accompanying short form base shelf prospectus dated May 4, 2022, which gives more general information, some of which may
not apply to the Offered Notes we are offering pursuant to this prospectus supplement. The accompanying short form base shelf prospectus
is referred to as the “accompanying prospectus” in this prospectus supplement.
TABLE OF CONTENTS
Prospectus Supplement
Page
Prospectus
Page
In this prospectus supplement,
unless the context otherwise indicates, the “Company”, “CN”, “we”, “us” and “our”
each refer to Canadian National Railway Company and its subsidiaries. All dollar amounts referred to in this prospectus supplement are
in Canadian dollars unless otherwise specifically expressed.
Documents
Incorporated by Reference
The following documents,
filed with the securities commission or other similar authority in each of the provinces and territories of Canada, are incorporated
by reference in, and form an integral part of, this prospectus supplement and the accompanying prospectus (except
that any description of our credit ratings in any of the following documents shall not be incorporated by reference into this prospectus
supplement or the accompanying prospectus):
Any
document of the type referred to in the preceding paragraph or required to be incorporated by reference herein pursuant to National Instrument
44-101 — Short-Form Prospectus Distributions (excluding confidential material change reports, if any) filed by the Company with
securities commissions or similar authorities in the provinces and territories of Canada subsequent to the date of this prospectus supplement
and prior to the termination of the offering under this prospectus supplement shall be deemed to be incorporated by reference into this
prospectus supplement and the accompanying prospectus (except that (i) any description of our credit ratings in any such document; and
(ii) any footnote to the Independent Registered Public Accountant’s signature of the Reports of Independent Registered Public Accounting
Firm included in any future audited financial statements that are incorporated by reference herein, including in each case any amendment
thereto, shall not be deemed to be incorporated by reference into this prospectus supplement or the accompanying prospectus).
Any statement
contained in this prospectus supplement or the accompanying prospectus or in a document incorporated or deemed to be incorporated by
reference in this prospectus supplement or the accompanying prospectus shall be deemed to be modified or superseded, for purposes of
this prospectus supplement and the accompanying prospectus, to the extent that a statement contained in this prospectus supplement
or the accompanying prospectus or in any other subsequently filed document that also is, or is deemed to be, incorporated by
reference in this prospectus supplement or the accompanying prospectus modifies or supersedes such statement. The modifying or
superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth
in the document that it modifies or supersedes. The making of a modifying or superseding statement shall not be deemed an admission
for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a
material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not
misleading in light of the circumstances in which it was made. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this prospectus supplement or the accompanying prospectus.
Copies of the documents incorporated
herein by reference may be obtained on request without charge from the Corporate Secretary, Canadian National Railway Company, 935 de
La Gauchetière Street West, Montreal, Québec, H3B 2M9 (telephone: (514) 399-7091), and are also available electronically
at www.sedar.com.
Use
of Proceeds
The net proceeds to the Company
from the sale of the Offered Notes will be approximately US$ million after deducting
the underwriting commissions and other expenses related to the offering. The Company plans to use such net proceeds for general corporate
purposes, including the redemption and refinancing of outstanding indebtedness, share repurchases, acquisitions and other business opportunities.
Consolidated
Capitalization
The following table, presented
in millions of Canadian dollars, sets forth the consolidated capitalization of the Company as at June 30, 2022 and as adjusted at
June 30, 2022 to give effect to the issuance of the Offered Notes.
The data under the column
“As at June 30, 2022” in the table below is derived from, and should be read in conjunction with, the Q2 2022 Interim
Financial Statements, prepared in accordance with United States generally accepted accounting principles and incorporated by reference
in this prospectus supplement and the accompanying prospectus.
| |
As at June 30, 2022 | | |
As adjusted as at June 30, 2022 | |
Current portion of long-term debt | |
$ | 2,447 | | |
$ | 2,447 | |
Operating lease liabilities included within Accounts payable and other | |
$ | 107 | | |
| 107 | |
Long-term debt | |
$ | 11,925 | | |
| 11,925 | |
Operating lease liabilities | |
$ | 312 | | |
| 312 | |
Offered Notes (1) | |
| - | | |
| | |
Total debt | |
$ | 14,791 | | |
| | |
Shareholders’ equity | |
| | | |
| | |
Common shares | |
$ | 3,660 | | |
$ | 3,660 | |
Common shares in Share Trusts | |
$ | (88 | ) | |
| (88 | ) |
Additional paid-in capital | |
$ | 374 | | |
| 374 | |
Accumulated other comprehensive loss | |
$ | (2,019 | ) | |
| (2,019 | ) |
Retained earnings | |
$ | 19,817 | | |
| 19,817 | |
Total shareholders’ equity | |
$ | 21,744 | | |
| 21,744 | |
Total capitalization | |
$ | 36,535 | | |
| | |
(1)
Converted into Canadian dollars using the following exchange rate: US$1.00 = $ as at , 2022
Earnings
Coverage Ratios
The following earnings coverage
ratios are calculated for the twelve-month periods ended December 31, 2021 and June 30, 2022 and give effect to the issuance of
all long-term debt of the Company and repayment or redemption thereof since the beginning of such twelve-month periods, respectively,
and the issuance of the Offered Notes, as if these transactions had occurred on the first day of such twelve-month periods, respectively.
The adjusted earnings coverage ratios further exclude the effects of the terminated merger agreement between the Company and Kansas City
Southern, including the merger termination fee and transaction-related costs, in order to show the impact excluding these non-recurring
items, which the Company believes is useful for investors.
|
|
Twelve
months
ended
December 31, 2021(1) |
|
Twelve
months
ended
June 30, 2022(1) |
Earnings coverage ratio(2) |
|
times |
|
times |
|
|
|
|
|
Adjusted earnings coverage ratio(3) |
|
times |
|
times |
(1) In the first quarter of 2022,
the Company changed its method of calculating market-related values of pension assets for its defined benefit plans using a retrospective
approach. Figures as of December 31, 2021 reflect the change in methodology. See “Note 2 — Change in accounting policy”
to the Q2 2022 Interim Financial Statements for additional information.
(2) Earnings coverage ratio is
required by Item 6 of Form 44-101F1 of Regulation 44-101 respecting Short Form Prospectus Distributions, which specifies its composition.
(3) Adjusted earnings coverage
ratio is a non-GAAP measure and is not a standardized financial measure under U.S. GAAP used to prepare the financial statements of the
Company and might not be comparable to similar financial measures disclosed by other issuers. The reconciliation of net income to net
income before interest, income taxes, merger termination fee and transaction-related costs for the twelve-month periods ended December
31, 2021 and June 30, 2022 and the computation of adjusted earnings coverage ratio is as follows:
| |
Twelve
months
ended December 31, 2021 | | |
Twelve months
ended
June 30, 2022 | |
Net income1 | |
| 4,899 | | |
| 5,130 | |
Add back: | |
| | | |
| | |
Interest | |
| 610 | | |
| 576 | |
Income taxes1 | |
| 1,443 | | |
| 1,512 | |
Merger termination fee | |
| (886 | ) | |
| (886 | ) |
Transaction-related costs | |
| 84 | | |
| 84 | |
Net income before interest, income taxes, merger termination fee and transaction-related costs | |
| 6,150 | | |
| 6,416 | |
Interest expense requirements on all debt (note 1) | |
| | | |
| | |
Adjusted earnings coverage ratio | |
| | | |
| | |
Note 1: Interest
expense requirements on all debt is the same number used in the calculation of the earnings coverage ratio and is calculated as interest
expense adjusted to annualize interest expense for debt issuances during the year and the Offered Notes, exclude interest expense for
debt redemptions during the year and remove bridge financing fees related to the cancelled bridge loan agreement in connection with the
terminated merger agreement with Kansas City Southern.
Earnings coverage ratio is
equal to net income before interest and income taxes divided by interest expense on all debt. Adjusted earnings coverage ratio is equal
to net income before interest, income taxes, merger termination fee and transaction-related costs, divided by interest expense on all
debt. These ratios do not purport to be indicative of earnings coverage ratios for any future period.
The
Company's interest expense requirements would have amounted to approximately $ million
and $ million for each of the twelve-month periods ended December 31, 2021
and June 30, 2022, respectively. The Company's net income before interest and income taxes for the twelve-month periods ended
December 31, 2021 and June 30, 2022, was $6,952 million and $7,218 million, respectively, which is
times and times the Company's interest expense requirements for the applicable period.
On an adjusted basis, the Company's net income before interest, income taxes, merger termination fee and transaction-related costs
for the twelve-month periods ended December 31, 2021 and June 30, 2022 was $6,150 million and
$6,416 million, respectively, which is times and
times the Company's interest expense requirements for the applicable period.
Description
of Offered Notes
The description of the
Offered Notes in this prospectus supplement supplements the description of the Company’s securities contained in the accompanying
prospectus. If the descriptions contained in these documents are inconsistent, the description contained in this prospectus supplement
controls. Capitalized terms used but not defined herein have the meanings given to them in the accompanying prospectus.
Unless otherwise indicated,
references to “CN”, the “Company”, or “we” in this “Description of Offered Notes” are
to Canadian National Railway Company but not to any of its subsidiaries.
General
The Offered Notes will
be issued in fully registered form in minimum denominations of US$2,000 and integral multiples of US$1,000 in excess thereof under
an indenture dated as of June 1, 1998 (as amended and supplemented from time to time the “U.S. Indenture”) between
the Company and The Bank of New York Mellon, as trustee (the “U.S. Trustee”). The aggregate principal amount of the
20 Notes will be initially limited to US$
and the aggregate principal amount of the 20 Notes will be initially limited to
US$ . The U.S. Indenture does not limit the amount of debt securities that may be issued
by the Company. The Offered Notes will be senior unsecured, general obligations of the Company and will rank equally with all of the
Company’s existing and future senior unsecured debt.
The Company conducts a substantial
portion of its operations through its subsidiaries. Claims of creditors of the Company’s subsidiaries generally have priority with
respect to the assets and earnings of those subsidiaries over the claims of creditors of the Company, including holders of the Offered
Notes. The Offered Notes therefore are structurally subordinated to creditors of the Company’s subsidiaries. The Offered Notes
are also effectively subordinated to any liabilities of the Company that are secured by any of the Company’s assets to the extent
of the value of the assets securing those liabilities, including, without limitation, those under finance leases.
The Company and its subsidiaries
may incur additional obligations in the future.
The 20
Notes and the 20 Notes will mature on ,
20 and , 20 ,
respectively. The Offered Notes are subject to earlier optional redemption as described under “—Optional
Redemption” below. The Offered Notes are not entitled to the benefit of any sinking fund.
Transfers of the Offered
Notes are registrable and principal is payable at the corporate trust office of the U.S. Trustee at 240 Greenwich Street, Floor 7E, New
York, New York 10286, United States, Attention: Global Trust Services. The Offered Notes will initially be issued in global form. See
“—Global Securities” below.
Interest on the Offered Notes
Interest will accrue on
the principal amount of each of the 20 Notes and the 20
Notes at the annual rate of % and %,
respectively, from and including , 2022 (the “Original Issue Date”) to, but
excluding, the date on which the principal amount is paid in full. Interest accrued on the Offered Notes will be payable
semi-annually in arrears on and of each
year, commencing on , 2023 (each an “interest payment date”), in each case
to the holder of record of such Offered Notes at the close of business on the or
immediately preceding such interest payment date. Interest on the Offered Notes will be computed on the basis of a 360-day year of
twelve 30-day months.
If any interest, principal
or other payment to be made in respect of the Offered Notes would otherwise be due on a day that is not a business day, payment may be
made on the next succeeding day that is a business day (and without any interest or other payment in respect of any delay), with the
same effect as if payment were made on the due date. The term “business day” in respect of the Offered Notes means any day
other than a Saturday, a Sunday or a day on which banking institutions in New York City are authorized or obligated by law to close.
Optional Redemption
Prior to the applicable Par
Call Date (as defined below), the Company may redeem the Offered Notes of a series, at its option, in whole or in part, at any time and
from time to time, at a redemption price (expressed as a percentage of principal amount and rounded to three decimal places) equal to
the greater of:
(1) (a) the sum of the
present values of the remaining scheduled payments of principal and interest thereon discounted to the redemption date (assuming the
Offered Notes of such series are scheduled to mature on the applicable Par Call Date) on a semi-annual basis (assuming a 360-day
year consisting of twelve 30-day months) at the applicable Treasury Rate plus the applicable Basis Points (as defined below) less
(b) interest accrued to the date of redemption, and
(2) 100% of the principal
amount of the Offered Notes of the applicable series to be redeemed,
plus, in either case, accrued
and unpaid interest thereon to the redemption date.
On or after the applicable
Par Call Date, the Company may redeem the Offered Notes of a series, in whole or in part, at any time and from time to time, at a redemption
price equal to 100% of the principal amount of the Offered Notes of such series being redeemed plus accrued and unpaid interest thereon
to the redemption date.
“Basis Points”
means (i) with respect to the 20 Notes, basis
points and (ii) with respect to the 20 Notes,
basis points.
“Par Call
Date” means (i) with respect to the 20 Notes,
(the date that is months prior to the maturity date of the 20
Notes) and (ii) with respect to the 20 Notes,
(the date that is months prior to the maturity date of the 20
Notes).
“Treasury Rate”
means, with respect to any redemption date with respect to the Offered Notes of a series, the yield determined by the Company in accordance
with the following two paragraphs.
The Treasury Rate shall be
determined by the Company after 4:15 p.m., New York City time (or after such time as yields on U.S. government securities are posted
daily by the Board of Governors of the Federal Reserve System), on the third business day preceding the redemption date based upon the
yield or yields for the most recent day that appear after such time on such day in the most recent statistical release published by the
Board of Governors of the Federal Reserve System designated as “Selected Interest Rates (Daily) - H.15” (or any successor
designation or publication) (“H.15”) under the caption “U.S. government securities—Treasury constant maturities—Nominal”
(or any successor caption or heading) (“H.15 TCM”). In determining the Treasury Rate, the Company shall select, as applicable:
(1) the yield for the Treasury constant maturity on H.15 exactly equal to the period from the redemption date to the applicable Par Call
Date (the “Remaining Life”); or (2) if there is no such Treasury constant maturity on H.15 exactly equal to the applicable
Remaining Life, the two yields – one yield corresponding to the Treasury constant maturity on H.15 immediately shorter than and
one yield corresponding to the Treasury constant maturity on H.15 immediately longer than the applicable Remaining Life – and shall
interpolate to the applicable Par Call Date on a straight-line basis (using the actual number of days) using such yields and rounding
the result to three decimal places; or (3) if there is no such Treasury constant maturity on H.15 shorter than or longer than the applicable
Remaining Life, the yield for the single Treasury constant maturity on H.15 closest to the applicable Remaining Life. For purposes of
this paragraph, the applicable Treasury constant maturity or maturities on H.15 shall be deemed to have a maturity date equal to the
relevant number of months or years, as applicable, of such Treasury constant maturity from the redemption date.
If on the third business
day preceding the redemption date H.15 TCM is no longer published, the Company shall calculate the Treasury Rate based on the rate
per annum equal to the semi-annual equivalent yield to maturity at 11:00 a.m., New York City time, on the second business day
preceding such redemption date of the United States Treasury security maturing on, or with a maturity that is closest to, the
applicable Par Call Date, as applicable. If there is no United States Treasury security maturing on the applicable Par Call Date but
there are two or more United States Treasury securities with a maturity date equally distant from the applicable Par Call Date, one
with a maturity date preceding the applicable Par Call Date and one with a maturity date following the applicable Par Call Date, the
Company shall select the United States Treasury security with a maturity date preceding the applicable Par Call Date. If there are
two or more United States Treasury securities maturing on the applicable Par Call Date or two or more United States Treasury
securities meeting the criteria of the preceding sentence, the Company shall select from among these two or more United States
Treasury securities the United States Treasury security that is trading closest to par based upon the average of the bid and asked
prices for such United States Treasury securities at 11:00 a.m., New York City time. In determining the Treasury Rate in accordance
with the terms of this paragraph, the semi-annual yield to maturity of the applicable United States Treasury security shall be based
upon the average of the bid and asked prices (expressed as a percentage of principal amount) at 11:00 a.m., New York City time, of
such United States Treasury security, and rounded to three decimal places.
The Company’s actions
and determinations in determining the redemption price shall be conclusive and binding for all purposes, absent manifest error.
Notice of any redemption
will be mailed or electronically delivered (or otherwise transmitted in accordance with the depositary’s procedures) at least 15
days but not more than 60 days before the redemption date to each holder of Offered Notes of a series to be redeemed.
In the case of a partial
redemption, selection of Offered Notes for redemption will be made pro rata, by lot or by such other method as the U.S. Trustee in its
sole discretion deems appropriate and fair. No Offered Notes of a principal amount of US$2,000 or less will be redeemed in part. If any
Offered Note is to be redeemed in part only, the notice of redemption that relates to such Offered Note will state the portion of the
principal amount of the Offered Note to be redeemed. A new Offered Note in a principal amount equal to the unredeemed portion of the
Offered Note will be issued in the name of the holder of the Offered Note upon surrender for cancellation of the original Offered Note.
For so long as the Offered Note are held by DTC (or another depositary), the redemption of a series of Offered Notes shall be done in
accordance with the policies and procedures of the depositary.
Unless the Company defaults
in payment of the redemption price, on and after the redemption date, interest will cease to accrue on the Offered Notes of the applicable
series or portions thereof called for redemption on such date.
Change of Control Repurchase Event
If a change of control repurchase
event occurs with respect to a series of Offered Notes, unless we have exercised our right to redeem such series of Offered Notes as
described above, we will be required to make an offer to each holder of such series of Offered Notes, to repurchase all or any part (in
minimum denominations of US$2,000 and integral multiples of US$1,000 in excess thereof) of that holder’s Offered Notes of such
series, as the case may be, at a repurchase price in cash equal to 101% of the aggregate principal amount of such securities repurchased
plus any accrued and unpaid interest on the securities repurchased to, but not including, the date of repurchase. Within 30 days
following a change of control repurchase event or, at our option, prior to a change of control, but after the public announcement of
the change of control, we will deliver a notice to each holder, with a copy to the U.S. Trustee, describing the transaction or transactions
that constitute or may constitute the change of control repurchase event and offering to repurchase securities on the payment date specified
in the notice, which date will be no earlier than 30 days and no later than 60 days from the date such notice is sent. The
notice shall, if sent prior to the date of consummation of the change of control, state that the offer to purchase is conditioned on
a change of control repurchase event occurring on or prior to the payment date specified in the notice. The Company will comply with
the requirements of Rule 14e-1 under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any other
securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase
of Offered Notes as a result of a change of control repurchase event. To the extent that the provisions of any securities laws or regulations
conflict with the change of control repurchase event provisions of the Offered Notes, the Company will comply with the applicable securities
laws and regulations and will not be deemed to have breached its obligations under the change of control repurchase event provisions
of the Offered Notes by virtue of such conflict.
On the repurchase date following
a change of control repurchase event in respect of a series of Offered Notes, the Company will, to the extent lawful:
| (1) | accept for payment all Offered Notes
of such series properly tendered pursuant to its offer; |
| (2) | deposit with the U.S. Trustee an amount
equal to the aggregate purchase price in respect of all Offered Notes of such series or portions
of Offered Notes of such series, as applicable, properly tendered; and |
| (3) | deliver or cause to be delivered to
the U.S. Trustee the Offered Notes of such series properly accepted, together with an officers’
certificate stating the aggregate principal amount of Offered Notes of such series being
purchased by the Company. |
The U.S. Trustee will promptly
deliver by wire transfer to each holder of Offered Notes of such series properly tendered the purchase price for the Offered Notes of
such series accepted for purchase, and the U.S. Trustee will promptly authenticate and mail (or cause to be transferred by book-entry)
to each holder a new security equal in principal amount to any unpurchased portion of any Offered Notes of such series surrendered; provided
that each new security will be in a minimum denomination of US$2,000 and integral multiples of US$1,000 in excess thereof.
The Company will not be required
to make an offer to repurchase any Offered Notes of a series upon a change of control repurchase event in respect of such series of Offered
Notes if a third party makes such an offer in the manner, at the times and otherwise in compliance with the requirements for an offer
made by the Company and such third party purchases all Offered Notes of such series properly tendered and not withdrawn under its offer.
For purposes of the foregoing
discussion of a repurchase at the option of holders, the following definitions are applicable:
“below investment
grade ratings event” means, with respect to the Offered Notes of a series, on any day within the 60-day period (which period
shall be extended so long as the rating of the Offered Notes of such series is under publicly announced consideration for a possible
downgrade by any of the rating agencies) after the earlier of (1) the occurrence of a change of control; or (2) public notice
of the occurrence of a change of control or the intention by the Company to effect a change of control, the Offered Notes of such series
are rated below investment grade by at least two of three rating agencies if there are three rating agencies, or all of the rating agencies
if there are less than three rating agencies. Notwithstanding the foregoing, a below investment grade ratings event otherwise arising
by virtue of a particular reduction in rating shall not be deemed to have occurred in respect of a particular change of control (and
thus shall not be deemed a below investment grade ratings event for purposes of the definition of change of control repurchase event
hereunder) if the rating agencies making the reduction in rating to which this definition would otherwise apply do not announce or publicly
confirm that the reduction was the result, in whole or in part, of any event or circumstance comprised of or arising as a result of,
or in respect of, the applicable change of control (whether or not the applicable change of control shall have occurred at the time of
the ratings event). The U.S. Trustee shall not be charged with knowledge of, or have any responsibility to monitor, the ratings of the
Offered Notes or whether there has been a below investment grade ratings event.
“change of control”
means the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any
“person” or “group” (as those terms are used in Section 13(d)(3) of the Exchange Act), other than the Company
or its subsidiaries, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly,
of more than 50% of the combined voting power of the Company’s voting stock or other voting stock into which the Company’s
voting stock is reclassified, consolidated, exchanged or changed measured by voting power rather than number of shares.
“change of control
repurchase event” means, with respect to a series of Offered Notes, the occurrence of both a change of control and a below
investment grade ratings event with respect to the applicable series of Offered Notes.
“DBRS”
means DBRS Limited.
“investment grade”
means a rating of Baa3 or better by Moody’s (or its equivalent under any successor rating categories of Moody’s); a rating
of BBB- or better by S&P (or its equivalent under any successor rating categories of S&P); a rating of BBB (low) or better by
DBRS (or its equivalent under any successor rating categories of DBRS); and the equivalent investment grade credit rating from any additional
rating agency or rating agencies selected by the Company.
“Moody’s”
means Moody’s Investors Service, Inc.
“rating
agency” means (1) each of Moody’s, DBRS and S&P; and (2) if any of Moody’s, DBRS and S&P
ceases to rate the Offered Notes or fails to make a rating of the Offered Notes publicly available for reasons outside of the
Company’s control, a “nationally recognized statistical rating organization” within the meaning of
Section 3(a)(62) of the Exchange Act, selected by the Company (as certified by the Company’s Chief Executive Officer or
Chief Financial Officer) as a replacement agency for Moody’s, DBRS and S&P, or all of them, as the case may be.
“S&P”
means S&P Global Ratings Inc.
“voting stock”
of any specified “person” (as that term is used in Section 13(d)(3) of the Exchange Act) as of any date means the capital
stock of such person that is at the time entitled to vote generally in the election of the board of directors of such person.
The change of control repurchase
event feature of the Offered Notes may in certain circumstances make more difficult or discourage a sale or takeover of the Company and,
thus, the removal of incumbent management. The Company could, in the future, enter into certain transactions, including asset sales,
acquisitions, refinancings or other recapitalizations, that would not constitute a change of control repurchase event under the Offered
Notes, but that could increase the amount of indebtedness outstanding at such time or otherwise affect the Company’s capital structure
or credit ratings on the Offered Notes.
The Company may not have
sufficient funds to repurchase all of the Offered Notes upon a change of control repurchase event.
Further Issues
The Company may from time
to time, without notice to or the consent of any registered holders, create and issue further notes ranking equally and ratably with
the Offered Notes of any series. Those further notes will have the same terms (except for the issue date, the offering price and, if
applicable, the initial interest payment date) as to status, redemption or otherwise and will be consolidated and form a single series
with the Offered Notes of the relevant series. If any further notes are not fungible with the applicable series of Offered Notes for
United States federal income tax purposes, such further notes will not have the same CUSIP number as the Offered Notes.
Modification and Waiver
The U.S. Indenture permits
the Company and the U.S. Trustee, with the consent of the holders of not less than a majority in principal amount of Outstanding Securities
(as defined in the U.S. Indenture) of each series of the Offered Notes affected by the modifications, and the applicable required consent
of any other series of Outstanding Securities affected by the modifications, to modify the U.S. Indenture or any supplemental indenture
or the rights of the holders of such series, except that no such modification shall, without the consent of the holders of all such Outstanding
Securities so affected thereby, (i) extend the fixed maturity of any Outstanding Security issued pursuant to the U.S. Indenture,
reduce the principal amount thereof or reduce the rate or extend the time of payment of interest thereon, or reduce any redemption premium
thereon, or (ii) reduce the aforesaid percentage of Outstanding Securities necessary to modify the U.S. Indenture or any supplemental
indenture.
The U.S. Indenture also permits
the Company and the U.S. Trustee, without the consent of the holders of the Offered Notes, to enter into indentures supplemental to the
U.S. Indenture for certain purposes, including (i) to change or eliminate any of the provisions of the U.S. Indenture; provided
that any such change or elimination (A) shall neither (1) apply to any Security of any series created prior to the execution
of such supplemental indenture and entitled to the benefit of such provision nor (2) modify the rights of the holders of any such
Security with respect to such provision or (B) shall become effective only when there is no such Security outstanding or (ii) to
cure any ambiguity or to correct or supplement any provision contained in the U.S. Indenture or in any supplemental indenture which may
be defective or inconsistent with any other provision contained in the U.S. Indenture or in any supplemental indenture, or to make such
other provisions in regard to matters or questions arising under the U.S. Indenture as shall not adversely affect the interests of holders
of Securities of any series issued pursuant to the U.S. Indenture.
The holders of at least a
majority in principal amount of the Offered Notes of a series can consent to waive compliance with certain provisions of the U.S. Indenture
on behalf of the holders of all the Offered Notes of such series.
Events of Default
An event of default (an
“Event of Default”) with respect to the Offered Notes of a series means any of the following events: default for
30 days in payment of interest on the Offered Notes of that series; default in payment of principal (or premium, if any) on the
Offered Notes of that series; default by the Company in the performance of any of the other covenants or warranties in the U.S.
Indenture relating to the Offered Notes of that series which shall not have been remedied within a period of 90 days after notice by
the U.S. Trustee or holders of at least 25% in aggregate principal amount of the Offered Notes of that series then outstanding; or
certain events of bankruptcy, insolvency or reorganization of the Company. The U.S. Indenture provides that the U.S. Trustee shall,
with certain exceptions, notify the holders of Securities of each series issued pursuant to the U.S. Indenture of Events of Default
known to it and affecting that series within 90 days after occurrence. The U.S. Trustee is protected if it withholds notice of any
default (except in the payment of principal of or interest or premium, if any, on Securities issued pursuant to the U.S. Indenture
or the making of any mandatory sinking fund payment) to the holders so affected if the U.S. Trustee considers it in the interest of
such holders to do so.
The U.S. Indenture provides
that if an Event of Default with respect to the Offered Notes of a series shall have occurred and be continuing, either the U.S. Trustee
or the holders of at least 25% in aggregate principal amount of the Offered Notes of that series then outstanding may declare the principal
of all the Offered Notes of that series to be due and payable immediately, but upon certain conditions such declaration may be annulled
and past defaults (except, unless theretofore cured, a default in payment of principal of or interest or premium, if any, on the Offered
Notes of that series) may be waived by the holders of a majority in principal amount of the Offered Notes of that series then outstanding.
Subject to the provisions
of the U.S. Indenture relating to the duties of the U.S. Trustee, in case an Event of Default with respect to the Offered Notes of a
series issued pursuant to the U.S. Indenture shall occur and be continuing, the U.S. Trustee shall be under no obligation to exercise
any of the rights or powers in the U.S. Indenture at the request or direction of any of the holders of the Offered Notes of that series,
unless such holders shall have offered to the U.S. Trustee reasonable security or indemnity. Subject to such provisions for indemnification
and certain limitations contained in the U.S. Indenture, the holders of a majority in principal amount of the Securities of each series
issued pursuant to the U.S. Indenture affected by an Event of Default and then outstanding shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the U.S. Trustee under the U.S. Indenture in respect of that series.
The U.S. Indenture requires the annual filing by the Company with the U.S. Trustee of a report as to compliance with certain covenants
contained in the U.S. Indenture.
Restriction on Secured Debt
In respect of the Offered
Notes, the Company has covenanted in the U.S. Indenture that if in the future it, or any of its Subsidiaries, shall secure any indebtedness
for money borrowed, or any guarantees of such indebtedness, now or hereafter existing, by any mortgage, pledge, hypothec, lien, security
interest, privilege, conditional sale or other title retention agreement or similar encumbrance (a “Mortgage”) on any present
or future Railway Properties or on shares of stock of any Railroad Subsidiary of the Company (“Secured Debt”), the Offered
Notes shall be secured by the Mortgage equally and ratably with such other indebtedness or guarantee thereby secured, unless, after giving
effect to such creation, issuance, incurrence, assumption or guarantee, the sum of the aggregate amount of all outstanding Secured Debt
of the Company and its Subsidiaries would not exceed an amount equal to 10% of the Consolidated Net Tangible Assets. For Secured Debt
that provides for an amount less than the principal amount thereof to be due and payable upon the acceleration of its final maturity,
the principal amount of the Secured Debt at any time its principal amount is measured shall be the principal amount due and payable on
the Secured Debt if the Secured Debt were to be accelerated at that time.
The foregoing
restriction on secured debt does not apply to and there shall be excluded from Secured Debt in any computation thereof: (i) any
Mortgage created on Railway Properties acquired or constructed after the first date on which the series of Offered Notes were
issued, within 180 days after the time of purchase or construction and commencement of full operation thereof, whichever is
later, as security for the payment of any part of the purchase price or construction cost of such Railway Properties, (ii) in
certain cases where the Company or any Subsidiary acquires Railway Properties subject to a pre-existing Mortgage or acquires a
corporation with Railway Properties subject to such pre-existing Mortgage or acquires, merges with or is consolidated with a
corporation whose shares or indebtedness are subject to a pre-existing Mortgage, (iii) to any conditional sales agreement or
other title retention agreement with respect to Railway Properties acquired after the first date on which the Offered Notes were
issued or (iv) in certain cases, to refundings or renewals of the foregoing or of any secured debt of the Company or any of its
Subsidiaries outstanding as of the first date on which the Offered Notes were issued. As used in such covenant, the term
“Railway Properties” means all main and branch lines of railway located in Canada or the United States, including all
real property used as the right of way for such lines, and the term “Railroad Subsidiary” means a Subsidiary whose
principal assets are Railway Properties. As used in the U.S. Indenture, the term “Subsidiary” means a corporation of
which the majority of the outstanding voting shares is owned, directly or indirectly, by the Company or by one or more Subsidiaries
of the Company; provided that no corporation shall become or shall be deemed to be a Subsidiary of the Company for purposes of the
U.S. Indenture if, and so long as, the Company does not control such entity by reason of any law, regulation, executive order or
other legal requirement, including, without limitation, pursuant to any voting trust or similar arrangement entered into in
connection with the acquisition of such corporation by the Company pending regulatory approval of such acquisition, and the term
“Consolidated Net Tangible Assets” means, at any date, the total amount of assets of the Company determined on a
consolidated basis after deducting all liabilities due within one year, all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles and all appropriate adjustments on account of minority interests of other
persons holding stock of the Subsidiaries, as set forth or reflected on the most recent consolidated balance sheet of the
Company.
Defeasance
The Company (a) will
be discharged (“legal defeasance”) from any and all obligations in respect of the Offered Notes of a series (except for certain
obligations including the obligation to register the transfer or exchange of the Offered Notes of that series, to replace destroyed,
lost or stolen Offered Notes of that series, to maintain paying agencies and to compensate and indemnify the U.S. Trustee) or (b) need
not comply (“covenant defeasance”) with certain covenants including those described above under “Restriction on Secured
Debt”, and certain Events of Default as specified in the U.S. Indenture (such as those arising out of the failure to comply with
such covenants) will no longer constitute Events of Default with respect to the Offered Notes of that series, in each case upon the irrevocable
deposit with the U.S. Trustee, in trust, of money and/or securities of or guaranteed by the U.S. government or any agency or instrumentality
thereof (or certificates evidencing an ownership interest therein) which, through the payment of interest and principal in respect thereof
in accordance with their terms, will provide cash at such times and in such amounts as will be sufficient (in the opinion of a certified
public accounting firm) to pay the principal of (and premium on, if any) and the interest on the Offered Notes of that series at Stated
Maturity (as defined in the U.S. Indenture) or upon redemption in accordance with the terms of the Offered Notes of that series (the
“Defeasance Trust”). Such defeasances may be effected only if, among other things, (i) the Company has delivered to
the U.S. Trustee an opinion of counsel to the effect that holders of the Offered Notes of that series will not recognize income, gain
or loss for United States federal or Canadian income tax purposes as a result of such defeasance and will be subject to tax in the same
manner and at the same times as if such defeasance had not occurred and, in the case of legal defeasance pursuant to clause (a),
indicating that a ruling to such effect has been received from or published by the U.S. Internal Revenue Service or that since the date
of the U.S. Indenture there has been a change in applicable U.S. federal income tax law to such effect and (ii) the creation of
the Defeasance Trust will not violate the United States Investment Company Act of 1940, as amended.
Global Securities
Upon original issuance, the
Offered Notes of each series will be represented by one or more global securities (the “Global Securities”) having an aggregate
principal amount equal to that of the Offered Notes represented thereby. Each Global Security will be deposited with, or on behalf of,
The Depository Trust Company (“DTC”), as depositary, and registered in the name of Cede & Co. (or such other nominee
as may be designated by DTC), as nominee of DTC. The Global Securities will bear legends regarding the restrictions on exchanges and
registration of transfer thereof referred to below and any other matters as may be provided for by the U.S. Indenture.
DTC has advised the Company
as follows: DTC is a limited purpose trust company organized under the New York Banking Law, a “banking organization” within
the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning
of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A
of the Exchange Act. DTC was created to hold securities of its participants (as defined below) and to facilitate the clearance and settlement
of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants,
thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and
dealers (including the underwriters), banks, trust companies, clearing corporations and certain other organizations, some of whom (and/or
their representatives) own DTC. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly (“indirect
participants”).
Notwithstanding any provision
of the U.S. Indenture or the Offered Notes described herein, no Global Security may be exchanged in whole or in part for Offered Notes
registered, and no transfer of a Global Security in whole or in part may be registered, in the name of any person other than DTC or any
nominee of DTC for such Global Security unless (i) DTC has notified the Company that it is unwilling or unable to continue as depositary
for the Global Security or has ceased to be qualified to act as such as required pursuant to the U.S. Indenture or (ii) there shall
have occurred and be continuing an Event of Default with respect to the Offered Notes represented by such Global Security.
All Offered Notes issued
in exchange for a Global Security or any portion thereof will be registered in such names as DTC may direct.
As long as DTC, or its nominee,
is the registered holder of a Global Security, DTC or such nominee, as the case may be, will be considered the sole owner and holder
of such Global Security and the Offered Notes represented thereby for all purposes under the Offered Notes and the U.S. Indenture. Except
in the limited circumstances referred to above, owners of beneficial interests in a Global Security will not be entitled to have such
Global Security or any Offered Notes represented thereby registered in their names, will not receive or be entitled to receive physical
delivery of certificated Offered Notes in exchange therefor and will not be considered to be the owners or holders of such Global Security
or any Offered Notes represented thereby for any purpose under the Offered Notes or the U.S. Indenture. All payments of principal of
and interest on a Global Security will be made to DTC or its nominee, as the case may be, as the holder thereof. The laws of some jurisdictions
require that certain purchasers of securities take physical delivery of such securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a Global Security.
Ownership of beneficial interests
in a Global Security will be limited to institutions that have accounts with DTC or its nominee (“participants”) and to persons
that may hold beneficial interests through participants or indirect participants. In connection with the issuance of any Global Security,
DTC will credit, in its book-entry registration and transfer system, the respective principal amounts of Offered Notes represented by
the Global Security to the accounts of its participants. Ownership of beneficial interests in a Global Security will be shown only on,
and the transfer of those ownership interests will be effected only through, records maintained by DTC’s participants and indirect
participants, which include Euroclear and Clearstream. Payments, transfers, exchanges, notices and other matters relating to beneficial
interests in a Global Security may be subject to various policies and procedures adopted by DTC from time to time. None of the Company
or the U.S. Trustee or any of their respective agents will have any responsibility or liability for any aspect of DTC’s or any
participant’s records relating to, or for payments or notices on account of, beneficial interests in a Global Security, or for
maintaining, supervising or reviewing any records relating to such beneficial interests.
Euroclear was created in
1968 to hold securities for participants of Euroclear and to clear and settle transactions between Euroclear participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from
lack of simultaneous transfers of securities and cash. Euroclear provides various other services, including securities lending and borrowing
and interfaces with domestic markets in several markets in several countries. Euroclear is operated by Euroclear Bank S.A./N.V. under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation. All operations are conducted by the Euroclear operator,
and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear operator, not the cooperative.
The cooperative establishes policy for Euroclear on behalf of Euroclear participants. Euroclear participants include banks (including
central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters. Indirect
access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant,
either directly or indirectly.
Clearstream is
incorporated under the laws of Luxembourg as a professional depositary. Clearstream holds securities for its participating
organizations and facilitates the clearance and settlement of securities transactions between Clearstream participants through
electronic book-entry changes in accounts of Clearstream participants, thereby eliminating the need for physical movement of
certificates. Clearstream provides Clearstream participants with, among other things, services for safekeeping, administration,
clearance and establishment of internationally traded securities and securities lending and borrowing. Clearstream interfaces with
domestic markets in several countries. As a professional depositary, Clearstream is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Sector. Clearstream participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other
organizations, and may include the underwriters. Indirect access to Clearstream is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial relationship with a Clearstream participant either directly
or indirectly.
Certain Notices
With respect to any Offered
Notes represented by a Global Security, notices to be given to the holders of the Offered Notes will be deemed to have been fully and
duly given to the holders when given to DTC, or its nominee, in accordance with DTC’s policies and procedures. The Company believes
that DTC’s practice is to inform its participants of any such notice it receives, in accordance with its policies and procedures.
Persons who hold beneficial interests in the Offered Notes through DTC or its direct or indirect participants may wish to consult with
them about the manner in which notices and other communications relating to the Offered Notes may be given and received through the facilities
of DTC. Neither the Company nor the U.S. Trustee will have any responsibility with respect to those policies and procedures or for any
notices or other communications among DTC, its direct and indirect participants and the beneficial owners of the Offered Notes in global
form.
With respect to any Offered
Notes not represented by a Global Security, notices to be given to the holders of the Offered Notes will be deemed sufficient if mailed
to the holders within the period prescribed for the giving of such notice.
Neither the failure to give
any notice nor any defect in any notice given to a particular holder will affect the sufficiency of any notice given to another holder.
Risk
Factors
Investment in the Offered
Notes is subject to a number of risks. Before deciding whether to invest in the Offered Notes, prospective investors should carefully
consider the information in, or incorporated by reference in, this prospectus supplement and the accompanying prospectus, including,
without limitation, the risks identified and discussed in the AIF, the 2021 MD&A and the Q2 2022 MD&A of the Company which are
incorporated by reference in this prospectus supplement.
Material
U.S. Federal Income Tax Consequences
The following describes the
material U.S. federal income tax consequences of the ownership and disposition of the Offered Notes to initial U.S. Holders (as defined
below) purchasing the Offered Notes in this offering at the offering price for the Offered Notes. This summary is based on the U.S. Internal
Revenue Code of 1986, as amended (the “Code”), final, temporary and proposed Treasury regulations, revenue rulings, administrative
pronouncements and judicial decisions, all as currently in effect and all as of the date hereof, any of which are subject to change,
possibly on a retroactive basis. Moreover, this summary applies only to purchasers who hold Offered Notes as “capital assets”
within the meaning of Section 1221 of the Code and does not describe all of the tax consequences that may be relevant to U.S. Holders
in light of their special circumstances, including foreign, state, or local tax consequences and tax consequences arising under the alternative
minimum tax and Medicare contribution tax, or to U.S. Holders subject to special rules, such as financial institutions, regulated investment
companies, partnerships or other entities classified as partnerships for U.S. federal income tax purposes, dealers or traders in securities,
persons holding Offered Notes as part of a straddle or conversion or other integrated transaction for tax purposes, life insurance companies,
tax-exempt entities or persons whose functional currency is not the U.S. dollar.
As used herein, the term
“U.S. Holder” means a beneficial owner of an Offered Note that is, for U.S. federal income tax purposes, (i) a citizen
or individual resident of the United States, (ii) a corporation created or organized in or under the laws of the United States,
any State thereof or the District of Columbia, or (iii) an estate or trust the income of which is subject to U.S. federal income
tax regardless of its source.
Certain Contingent Payments.
We will be obligated to make payments of additional amounts if we repurchase all or any of the Offered Notes upon the occurrence of a
“Change of Control Repurchase Event,” as described under “Description of Offered Notes—Change of Control Repurchase
Event.” We intend to take the position that the possibility of such payments does not result in the Offered Notes being treated
as contingent payment debt instruments under the applicable Treasury regulations. Our position is not binding on the U.S. Internal Revenue
Service (“IRS”). If the IRS takes a contrary position, you may be required to accrue interest income based upon a “comparable
yield” (as defined in the Treasury regulations) determined at the time of issuance of the Offered Notes (which is not expected
to differ significantly from the actual yield on the Offered Notes), with adjustments to such accruals when any contingent payments are
made that differ from the projected payments based on the comparable yield. In addition, any income on the sale, exchange, retirement
or other taxable disposition of the Offered Notes would be treated as interest income rather than as capital gain. You should consult
your tax adviser regarding the tax consequences if the Offered Notes were treated as contingent payment debt instruments. The remainder
of this discussion assumes that the Offered Notes are not treated as contingent payment debt instruments.
Interest on the Offered
Notes. Interest accrued or received in respect of an Offered Note generally will be included in gross income as ordinary income at
the time the interest accrues or is received in accordance with your usual method of accounting for U.S. federal income tax purposes.
Interest income earned with respect to an Offered Note will constitute foreign-source income for U.S. federal income tax purposes for
purposes of the rules regarding the foreign tax credit allowable to a U.S. Holder and will generally be “passive” income
for purposes of computing the foreign tax credit limitation. The rules governing foreign tax credits are complex and, therefore, you
should consult your tax adviser regarding the availability of foreign tax credits in your particular circumstances.
Sale, Exchange or Retirement
of the Offered Notes. Upon the sale, exchange or retirement of an Offered Note, you generally will recognize gain or loss equal to
the difference between the amount realized (not including any amounts attributable to accrued and unpaid interest, which will be taxed
as described under “Interest on the Offered Notes” above) and your tax basis in the Offered Note. Your tax basis in an Offered
Note generally will be equal to the cost of the Offered Note. Gain or loss generally will be U.S.-source income for purposes of computing
your foreign tax credit limitation. In addition, this gain or loss generally will be capital gain or loss and will be long-term capital
gain or loss if at the time of sale, exchange or retirement, you have held the Offered Note for more than one year. Long-term capital
gain of a non-corporate U.S. Holder is generally taxed at preferential rates. The deductibility of capital losses is subject to certain
limitations.
Information Reporting and Backup Withholding
Information returns may
be filed with the IRS in connection with payments on the Offered Notes and the proceeds from a sale or other disposition of the
Offered Notes. You may be subject to U.S. backup withholding on these payments if you fail to provide your taxpayer identification
number and comply with certain certification procedures or otherwise establish an exemption from backup withholding. The amount of
any backup withholding will be allowed as a credit against your federal income tax liability and may entitle you to a refund,
provided that the required information is furnished to the IRS.
Information with Respect to Foreign Financial
Assets
Owners of “specified
foreign financial assets” with an aggregate value in excess of $50,000 (and in some circumstances, a higher threshold) may be required
to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” may
include financial accounts maintained by foreign financial institutions, as well as the following, but only if they are held for investment
and not held in account maintained by financial institutions: (i) stocks and securities issued by non-U.S. persons, (ii) financial instruments
and contracts that have non-U.S. issuers or counterparties, and (iii) interests in foreign entities. Holders are urged to consult their
tax advisers regarding the application of this reporting requirement to their ownership of the Offered Notes.
Material
Canadian Income Tax Consequences
The following is a summary
of the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Income Tax Act”) generally
applicable to the holders of the Offered Notes who acquire such notes as beneficial owners pursuant to this prospectus supplement who,
for the purpose of the Income Tax Act, are not resident or deemed to be resident in Canada, hold their Offered Notes as capital property,
are not “specified shareholders” of the Company or persons who do not deal at arm’s length with a “specified
shareholder” of the Company for purposes of the “thin capitalization” rule contained in subsection 18(4) of the
Income Tax Act, deal at arm’s length with the Company (and any transferee resident or deemed to be resident in Canada to whom the
holder disposes of Offered Notes), do not receive any payment of interest (including any amounts deemed to be interest) on the Offered
Notes in respect of a debt or other obligation to pay an amount to a person with whom the Company does not deal at arm’s length,
do not use or hold and are not deemed to use or hold the Offered Notes in carrying on business in Canada and are not insurers that carry
on an insurance business in Canada and elsewhere (the “Non-Resident Holders”). THIS SUMMARY IS GENERAL IN NATURE AND IS NOT
EXHAUSTIVE OF ALL POSSIBLE CANADIAN TAX CONSEQUENCES. ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSULT WITH THEIR OWN TAX ADVISERS FOR
ADVICE WITH RESPECT TO THEIR PARTICULAR CIRCUMSTANCES, INCLUDING ANY CONSEQUENCES OF AN INVESTMENT IN THE OFFERED NOTES ARISING UNDER
TAX LAWS OF ANY PROVINCE OR TERRITORY OF CANADA OR TAX LAWS OF ANY JURISDICTION OTHER THAN CANADA.
This summary is based on
the current provisions of the Income Tax Act, the regulations thereunder, our counsel’s understanding of the current administrative
practice of the Canada Revenue Agency, and the current provisions of the international tax convention entered into by Canada and the
United States, but does not otherwise take into account or anticipate changes in the law, whether by judicial, governmental or legislative
decisions or action, nor is it exhaustive of all possible Canadian federal income tax consequences. This summary takes into account all
specific proposals to amend the Income Tax Act and the regulations thereunder announced by or on behalf of the Minister of Finance (Canada)
prior to the date hereof (the “Proposed Amendments”) and assumes that the Proposed Amendments will be enacted as proposed.
However, no assurances can be given that the Proposed Amendments will be enacted as proposed or at all. This summary does not take into
account or consideration tax legislation of any province or territory of Canada or any jurisdiction other than Canada. This summary is
of a general nature only and is not intended to be, and should not be interpreted as, legal or tax advice to any particular holder of
an Offered Notes including the Non-Resident Holders.
The Company is not required
to withhold Canadian income tax from interest (including any amounts deemed to be interest) or principal or premium paid or credited
by it on the Offered Notes to Non-Resident Holders, or from proceeds received by Non-Resident Holders on dispositions of the Offered
Notes, including redemptions, payments on maturity or repurchases.
No other tax on income (including
taxable capital gains) is payable in respect of the purchase, holding, redemption or disposition of the Offered Notes or the receipt
of interest (including any amounts deemed to be interest), principal or any premium thereon by Non-Resident Holders with whom the Company
deals at arm’s length. Under the Income Tax Act, related persons (as defined therein) are deemed not to deal at arm’s length
and it is a question of fact whether persons not related to each other deal at arm’s length.
Underwriting
Subject to the terms and
conditions set forth in the pricing agreement, dated the date of this prospectus supplement, between the Company and the underwriters
named below, for whom BofA Securities, Inc., Citigroup Global Markets Inc. and Wells Fargo Securities, LLC are acting as representatives,
the Company has agreed to sell to each of the underwriters, and each of such underwriters has severally agreed to purchase, the respective
principal amounts of Offered Notes set forth opposite its name below:
Underwriters |
|
Principal Amount of 20 Notes |
|
Principal Amount of 20 Notes |
|
BofA Securities, Inc. |
|
US$ |
|
|
US$ |
|
|
Citigroup Global Markets Inc. |
|
|
|
|
|
|
|
Wells Fargo Securities, LLC |
|
|
|
|
|
|
|
Total |
|
US$ |
|
|
US$ |
|
|
The pricing agreement provides
that the obligations of the several underwriters to purchase the Offered Notes offered hereby are subject to certain conditions and that
the underwriters will purchase all of the Offered Notes offered by this prospectus supplement if any of the Offered Notes are purchased.
We have been advised by
the representatives that the underwriters propose to offer the Offered Notes directly to the public at the public offering prices
set forth on the cover page of this prospectus supplement and to certain dealers at such prices less a concession not in excess of %
of the principal amount of the 20 Notes, and %
of the principal amount of the 20 Notes. The underwriters may allow, and such dealers
may reallow, a concession not in excess of % of the principal amount of the 20
Notes, and % of the principal amount of the 20
Notes to certain other dealers. After the initial public offering, the representatives of the underwriters may change the offering
price and other selling terms.
We estimate that our expenses
relating to this offering, excluding the underwriting commissions, will be approximately US$1 million.
We have agreed to indemnify
the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended, and to contribute to
payments the underwriters may be required to make in respect of any of these liabilities.
Each series of Offered Notes
is a new issue of securities with no established trading market. The Offered Notes will not be listed on any securities exchange or on
any automated dealer quotation system. The underwriters may make a market in the Offered Notes after completion of the offering, but
will not be obligated to do so and may discontinue any market making activities at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Offered Notes or that an active public market for the Offered Notes will develop. If
an active public trading market for the Offered Notes does not develop, the market price and liquidity of the Offered Notes may be adversely
affected.
In connection with the
offering of the Offered Notes, certain of the underwriters may engage in transactions that stabilize, maintain or otherwise affect
the price of the Offered Notes. Specifically, the underwriters may overallot in connection with the offering, creating a short
position. In addition, the underwriters may bid for, and purchase, the Offered Notes in the open market to cover short positions or
to stabilize the price of the Offered Notes. Any of these activities may stabilize or maintain the market price of the Offered Notes
above independent market levels, but no representation is made hereby of the magnitude of any effect that the transactions described
above may have on the market price of the Offered Notes. The underwriters will not be required to engage in these activities, and
may end any of these activities without notice.
The underwriters may impose
a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting commission received
by it because the representatives have repurchased notes sold by or for the account of such underwriter in stabilizing or short covering
transactions.
Neither we nor any of the
underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above
may have on the price of the Offered Notes. In addition, neither we nor any of the underwriters makes any representation that the underwriters
will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.
The underwriters have performed
investment banking, commercial banking and advisory services for us from time to time for which they have received customary fees and
expenses. The underwriters may, from time to time, engage in transactions with and perform services for us in the ordinary course of
their business.
In addition, in the ordinary
course of their business activities, the underwriters and their affiliates may make or hold a broad array of investments and actively
trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account
and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of ours
or our affiliates. Certain of the underwriters or their affiliates that have a lending relationship with us routinely hedge, and others
may hedge, their credit exposure to us consistent with their customary risk management policies. Typically, such underwriters and their
affiliates would hedge such exposure by entering into transactions which consist of either the purchase of credit default swaps or the
creation of short positions in our securities, including potentially the notes offered hereby. Any such credit default swaps or short
positions could adversely affect future trading prices of the notes offered hereby. The underwriters and their affiliates may also make
investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments
and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.
Each of the underwriters
(each, a “Connected Underwriter”) is an affiliate of a bank which is a member of a syndicate of financial institutions that
has made available to the Company a revolving credit facility. In addition, the Company has entered into bilateral letter of credit facility
agreements with a number of the banks affiliated to the Connected Underwriters, under which $553 million of letters of credit was
issued as at June 30, 2022. Accordingly, under applicable Canadian securities laws, the Company may be considered a “connected
issuer” to the Connected Underwriters, within the meaning of National Instrument 33-105 — Underwriting Conflicts.
The Company is not in default of its obligations to such financial institutions. The decision to issue the Offered Notes and the determination
of the terms of the distribution were made through negotiation between the Company, on the one hand, and the underwriters, on the other
hand. The banks of which the Connected Underwriters are respectively affiliates did not have any involvement in such decision or determination.
The underwriters will not receive any benefit in connection with this offering other than a portion of the underwriting commissions payable
by the Company under the offering.
We expect that delivery
of the Offered Notes will be made to investors on or about the closing date specified on the cover page of this prospectus supplement,
which will be the business day following the date of pricing of the Offered Notes
(such settlement cycle being referred to as “T+ ”). Pursuant
to 15c6-l under the Exchange Act, trades in the secondary market generally are required to settle in two business days, unless the parties
to any such trade expressly agree otherwise. Accordingly, purchasers who wish to trade the Offered Notes prior to the date that is two
business days preceding the settlement date will be required, by virtue of the fact that the Offered Notes initially will settle in T+ ,
to specify an alternate settlement arrangement at the time of any such trade to prevent a failed settlement. Purchasers of the Offered
Notes who wish to trade the Offered Notes prior to the date that is two business days preceding the settlement date should consult their
advisers.
Selling Restrictions
Each underwriter has represented
that it has not offered or sold, and has agreed not to offer or sell, directly or indirectly, in Canada, any of the Offered Notes in
violation of the securities laws of any province or territory of Canada.
Notice to Prospective Investors in the
European Economic Area/Prohibition of Sales to European Economic Area Retail Investors
The Offered Notes are not
intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail
investor in the European Economic Area (“EEA”). For these purposes, a retail investor means a person who is one (or more)
of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, “MiFID II”); or (ii)
a customer within the meaning of Directive (EU) 2016/97 (as amended, the “Insurance Distribution Directive”), where that
customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II; or (iii) not a qualified investor
as defined in Regulation (EU) 2017/1129 (the “Prospectus Regulation”). Consequently no key information document required
by Regulation (EU) No 1286/2014 (as amended, the “PRIIPs Regulation”) for offering or selling the Offered Notes or otherwise
making them available to retail investors in the EEA has been prepared and therefore offering or selling the Offered Notes or otherwise
making them available to any retail investor in the EEA may be unlawful under the PRIIPs Regulation. This prospectus supplement and the
accompanying prospectus has been prepared on the basis that any offer of Offered Notes in any Member State of the EEA will be made pursuant
to an exemption under the Prospectus Regulation from the requirement to publish a prospectus for offers of Offered Notes. This prospectus
supplement and the accompanying prospectus is not a prospectus for the purposes of the Prospectus Regulation.
Prohibition of Sales to United Kingdom
Retail Investors
The Offered Notes are not
intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail
investor in the United Kingdom (“UK”). For these purposes, a retail investor means a person who is one (or more) of: (i)
a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the
European Union (Withdrawal) Act 2018 (“EUWA”); (ii) a customer within the meaning of the provisions of the Financial Services
and Markets Act 2000 (“FSMA”) and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where
that customer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it
forms part of domestic law by virtue of the EUWA; or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129
as it forms part of domestic law by virtue of the EUWA. Consequently no key information document required by Regulation (EU) No 1286/2014
as it forms part of domestic law by virtue of the EUWA (the “UK PRIIPs Regulation”) for offering or selling the Offered Notes
or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the Offered Notes
or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation. This prospectus supplement
and the accompanying prospectus have been prepared on the basis that any offer of Offered Notes in the UK will be made pursuant to an
exemption under the UK Prospectus Regulation and the FSMA from the requirement to publish a prospectus for offers of the Offered Notes.
This prospectus supplement and the accompanying prospectus are not a prospectus for the purposes of the UK Prospectus Regulation or the
FSMA.
Notice to Prospective Investors in the
United Kingdom
In addition, in the UK, this
prospectus supplement and the accompanying prospectus is being distributed only to, and is directed only at qualified investors within
the meaning of Article 2 of the UK Prospectus Regulation who are, (i) persons who have professional experience in matters relating to
investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended,
the “Order”), and/or (ii) high net worth companies (or persons to whom it may otherwise be lawfully communicated) falling
within Article 49(2)(a) to (d) of the Order, which persons together we refer to in this prospectus supplement as “relevant persons.”
Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the UK.
This prospectus supplement and the accompanying prospectus must not be acted on or relied on in the UK by persons who are not relevant
persons. In the UK, any investment or investment activity to which this prospectus supplement and the accompanying prospectus relates
is only available to, and will be engaged in with, relevant persons only.
Notice to Prospective Investors in Hong
Kong
No Offered Notes may be
offered or sold in Hong Kong, by means of any document, other than: (i) to “professional investors” (as defined in the
Securities and Futures Ordinance (Cap. 571) of Hong Kong (the “SFO”)) and any rules made thereunder; or (ii) in other
circumstances which do not result in the document being a “prospectus” (as defined in the Companies (Winding Up and
Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong) or which do not constitute an offer to the public within the meaning of
that Ordinance. No advertisement, invitation or document relating to the Offered Notes, which is directed at, or the contents of
which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong
Kong) has been or will be issued other than with respect to the Offered Notes which are or are intended to be disposed of only to
persons outside Hong Kong or only to “professional investors” (as defined in the SFO) and any rules made thereunder.
Notice to Prospective Investors in Japan
The
Offered Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan (Act No. 25 of
1948, as amended) (the “FIEA”). The Offered Notes may not be offered or sold, directly or indirectly, in Japan or to or for
the benefit of any resident of Japan (including any person resident in Japan or any corporation or other entity organized under the laws
of Japan) or to others for reoffering or resale, directly or indirectly, in Japan or to or for the benefit of any resident of Japan,
except pursuant to an exemption from the registration requirements of the FIEA and otherwise in compliance with any relevant laws and
regulations of Japan.
Notice to Prospective Investors in Singapore
This prospectus supplement
has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus supplement and any other
document or material in connection with the offer or sale, or invitation for subscription or purchase, of the Offered Notes may not be
circulated or distributed, nor may the Offered Notes be offered or sold, or be made the subject of an invitation for subscription or
purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the
Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or
any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise
pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance
with conditions set forth in the SFA.
Where the Offered Notes are
subscribed or purchased under Section 275 of the SFA by a relevant person which is:
| · | a
corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments
and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or |
| · | a
trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is
an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’
rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust
has acquired the Offered Notes pursuant to an offer made under Section 275 of the SFA except |
| (1) | to an institutional investor under Section
274 of the SFA or to a relevant person pursuant to Section 275(1A) of the SFA, or to any
person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the
SFA; |
| (2) | where no consideration is or will be
given for the transfer; |
| (3) | where the transfer is by operation of
law; |
| (4) | as specified in Section 276(7) of the
SFA; or |
| (5) | as specified in Regulation 32 of the
Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of
Singapore. |
Singapore SFA Product
Classification — Solely for the purposes of its obligations pursuant to sections 309B(1)(a) and 309B(1)(c) of the SFA, we have
determined, and hereby notify all relevant persons (as defined in Section 309A of the SFA) that the Offered Notes are “prescribed
capital markets products” (as defined in the Securities and Futures (Capital Markets Products) Regulations 2018) and Excluded Investment
Products (as defined in MAS Notice SFA 04-N12: Notice on the Sale of Investment Products and MAS Notice FAA-N16: Notice on Recommendations
on Investment Products).
Notice to Prospective Investors in Taiwan
The Offered Notes have
not been and will not be registered with, or filed with, or approved by, the Financial Supervisory Commission of Taiwan, the
Republic of China (“Taiwan”) and/or any other regulatory authorities of Taiwan, pursuant to relevant securities laws and
regulations and may not be offered, issued or sold in Taiwan through a public offering or in any manner which would constitute an
offer or a solicitation of an offer within the meaning of the Securities and Exchange Act of Taiwan or relevant laws and regulations
of Taiwan or would otherwise require registration with, filing with, or the approval of the Financial Supervisory Commission of
Taiwan and/or any other regulatory authorities of Taiwan. No person or entity in Taiwan has been authorized to offer, sell, give
advice regarding or otherwise intermediate the offering and sale of the Offered Notes in Taiwan.
Notice to Prospective Investors in Switzerland
This prospectus supplement
and the accompanying prospectus are not intended to constitute an offer or solicitation to purchase or invest in the Offered Notes. The
Offered Notes may not be publicly offered, directly or indirectly, in Switzerland within the meaning of the Swiss Financial Services
Act (“FinSA”), and no application has or will be made to admit the Offered Notes to trading on any trading venue (exchange
or multilateral trading facility) in Switzerland. Neither this prospectus supplement, the accompanying prospectus nor any other offering
or marketing material relating to the Offered Notes constitutes a prospectus pursuant to the FinSA, and neither this prospectus supplement,
the accompanying prospectus, nor any other offering or marketing material relating to the Offered Notes may be publicly distributed or
otherwise made publicly available in Switzerland.
Legal
Matters
Certain legal matters will
be passed upon for the Company by Stikeman Elliott LLP, with respect
to matters of Canadian federal and Québec laws. The validity of the Offered Notes will be passed upon for the Company by Cravath,
Swaine & Moore LLP, New York, New York, and for the underwriters by Davis Polk & Wardwell LLP, New York, New York. Cravath, Swaine
& Moore LLP and Davis Polk & Wardwell LLP may rely on the opinion of Stikeman Elliott LLP as to all matters of Canadian federal and Québec laws.
As of the date hereof, the
partners and associates of Cravath, Swaine & Moore LLP, as a group, and the partners and associates of Davis Polk & Wardwell
LLP, as a group, each beneficially own, directly or indirectly, less than 1% of the outstanding securities of the Company.
Independent
Registered Public Accounting Firm
KPMG LLP is the external
auditor who prepared the Reports of Independent Registered Public Accounting Firm to the Shareholders and Board of Directors of the Company
on the consolidated balance sheets of the Company as of December 31, 2021 and 2020 and the related consolidated statements of income,
comprehensive income, changes in shareholders’ equity and cash flows for each of the years in the two-year period ended December 31,
2021 and the related notes, and the effectiveness of internal control over financial reporting as of December 31, 2021, incorporated
by reference in this prospectus supplement and the accompanying prospectus. KPMG LLP has confirmed with respect to the Company that they
are independent within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in
Canada and any applicable legislation or regulation.
SHORT FORM BASE SHELF PROSPECTUS
CANADIAN NATIONAL RAILWAY COMPANY
CAD$6,000,000,000
Debt Securities
Canadian National Railway Company (the “Company”) may offer
and issue from time to time unsecured debt securities (the “Securities”) in one or more series in an aggregate principal amount
not to exceed CAD$6,000,000,000 or the equivalent, based on the applicable exchange rate at the time of offering, in U.S. dollars or such
other currencies or units based on or relating to such other currencies, as shall be designated by the Company at the time of offering.
This prospectus does not qualify the issuance of debt securities in
respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to one or more underlying
interests including, for example, an equity or debt security, a statistical measure of economic or financial performance including, but
not limited to, any currency, consumer price or mortgage index, or the price or value of one or more commodities, indices or other items,
or any other item or formula, or any combination or basket of the foregoing items.
The specific terms of any offering of Securities will be set forth
in a prospectus supplement (a “prospectus supplement”) including, where applicable, the title of the Securities, any limit
on the aggregate principal amount of the Securities, the maturity date of the Securities, whether payment on the Securities will be senior
or subordinated to the Company’s other liabilities and obligations, whether the Securities will bear interest, the interest rate
or method of determining the interest rate, whether any conversion or exchange rights attach to the Securities, whether the Company may
redeem the Securities at its option and any other specific terms. The Company reserves the right to include in a prospectus supplement
specific variable terms pertaining to the Securities that are not within the descriptions set forth in this prospectus.
All shelf information permitted under applicable laws to be omitted
from this prospectus will be contained in one or more prospectus supplements that will be delivered to purchasers together with this prospectus.
Each prospectus supplement will be incorporated by reference into this prospectus for the purposes of securities legislation as of the
date of the prospectus supplement and only for the purposes of the distribution of the Securities to which the prospectus supplement pertains.
The Company may offer and sell the Securities to or through underwriters
or dealers purchasing as principals or through agents. The applicable prospectus supplement will identify each underwriter, dealer or
agent engaged by the Company in connection with the offering and sale of the Securities and will set forth the terms of the offering of
such Securities and the method of distribution, including, to the extent applicable, the proceeds to the Company from the sale of the
Securities, any public offering price, any fees, discounts, commissions or any other compensation payable to underwriters, dealers or
agents and any other material terms of the plan of distribution. See “Plan of Distribution”.
Unless otherwise specified in the applicable prospectus supplement,
each issue of Securities will be a new issue of Securities with no established trading market. There is currently no market through
which the Securities may be sold and purchasers may not be able to resell the Securities purchased under this prospectus and the prospectus
supplement relating to such Securities. This may affect the pricing of such Securities in the secondary market, the transparency and availability
of trading prices, the liquidity of the Securities and the extent of issuer regulation.
In this prospectus, unless the context otherwise indicates, the “Company”
refers to Canadian National Railway Company and its subsidiaries.
All dollar amounts referred to in this prospectus are expressed in
Canadian dollars and have been prepared in accordance with United States generally accepted accounting principles (GAAP) unless otherwise
specifically noted.
The Company is a Canadian issuer that is permitted, under a multijurisdictional
disclosure system adopted by the United States, to prepare this prospectus in accordance with the disclosure requirements of all the provinces
and territories of Canada. Prospective investors in the United States should be aware that such requirements are different from those
of the United States.
Prospective investors should be aware that the acquisition of the
Securities may have tax consequences both in the United States and in Canada. Such consequences for investors who are resident in, or
citizens of, the United States may not be fully described herein or in any applicable prospectus supplement.
The enforcement by investors of civil liabilities under United States
federal securities laws may be affected adversely by the fact that the Company is a Canadian corporation, that a majority of its officers
and directors are residents of Canada, that the underwriters may be residents of Canada, that experts named in the registration statement
are residents of Canada and that a substantial portion of the assets of the Company and said persons may be located outside the United
States. See “Enforcement of Civil Liabilities under the U.S. Federal Securities Laws”.
These securities have not been approved or disapproved by the U.S.
Securities and Exchange Commission (the “SEC”) or any U.S. state securities regulator nor has the SEC or any U.S. state securities
regulator passed upon the accuracy or adequacy of this prospectus or any applicable prospectus supplement. Any representation to the contrary
is a criminal offense.
An investment in Securities involves significant risks that should
be carefully considered by prospective investors before purchasing Securities. The risks outlined in this prospectus and in the documents
incorporated by reference herein, including the applicable prospectus supplement, should be carefully reviewed and considered by prospective
investors in connection with any investment in Securities. See “Risk Factors”.
The Company’s head office is located at 935 de La Gauchetière
Street West, Montreal, Quebec H3B 2M9.
table
of contents
Page
Documents
Incorporated by Reference
Information
has been incorporated by reference into this prospectus from documents filed with securities commissions or similar authorities in Canada.
The following documents, filed with the securities commission or other similar authority in each of the provinces and territories of Canada,
are incorporated by reference into, and form an integral part of, this prospectus:
Any document of the type referred to in the preceding
paragraph or required to be incorporated by reference herein pursuant to National Instrument 44-101 — Short-Form Prospectus
Distributions (excluding confidential material change reports, if any) filed by the Company with securities commissions or similar
authorities in the provinces and territories of Canada subsequent to the date of this prospectus and prior to the completion or withdrawal
of any offering under any prospectus supplement shall be deemed to be incorporated by reference into this prospectus.
Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded, for purposes of this prospectus,
to the extent that a statement contained herein or in any other subsequently filed document which also is, or is deemed to be, incorporated
by reference herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has modified
or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making
of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when
made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required
to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement
so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
Upon a new annual information form and the related
annual financial statements being filed by the Company with, and, where required, accepted by, the applicable securities regulatory authorities
during the currency of this prospectus, the previous annual information form, the previous annual financial statements and all interim
financial statements, management’s discussions and analysis and material change reports filed prior to the commencement of the Company’s
fiscal year with respect to which the new annual information form is filed shall be deemed no longer to be incorporated by reference into
this prospectus for purposes of future offers and sales of Securities hereunder. Upon interim financial statements and the accompanying
management’s discussion and analysis being filed by the Company with the applicable securities regulatory authorities during the
currency of this prospectus, all interim financial statements and the accompanying management’s discussion and analysis filed prior
to such new interim consolidated financial statements and accompanying management’s discussion and analysis shall be deemed no longer
to be incorporated by reference into this prospectus for purposes of future offers and sales of the Securities hereunder. In addition,
upon a new management information circular for an annual meeting of shareholders being filed by the Company with the applicable securities
regulatory authorities during the currency of this prospectus, the previous management information circular filed in respect of the prior
annual meeting of shareholders shall be deemed no longer to be incorporated by reference into this prospectus for purposes of future offers
and sales of the Securities hereunder.
A prospectus supplement containing the specific
terms in respect of any Securities, updated disclosure of earnings coverage ratios, if applicable, and other information in relation to
the Securities will be delivered to prospective purchasers of such Securities together with this prospectus and will be deemed to be incorporated
by reference into this prospectus as of the date of such prospectus supplement, but only for purposes of the offering of such Securities
covered by that prospectus supplement.
Copies of the documents incorporated herein by
reference may be obtained on request without charge from the Corporate Secretary, Canadian National Railway Company, 935 de La Gauchetière
Street West, Montreal, Quebec, H3B 2M9 (telephone: (514) 399-7091), and are also available electronically at www.sedar.com.
Available
Information
In addition to its continuous disclosure obligations
under the securities laws of the provinces of Canada, the Company is subject to the information requirements of the United States Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith files reports and other information with
the SEC. Under the multijurisdictional disclosure system adopted by the United States, such reports and other information may be prepared
in accordance with the disclosure requirements of Canada, which requirements are different from those of the United States. Such reports
and other information, when filed by the Company in accordance with such requirements, can be inspected and copied at the Public Reference
Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operations of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports and other information regarding
issuers that file electronically with the SEC. The address of that site is http://www.sec.gov.
The Company has filed with the SEC a Registration
Statement on Form F-10 (the “Registration Statement”) under the United States Securities Act of 1933, as amended (the
“Securities Act”), with respect to the Securities and of which this prospectus is a part. This prospectus does not contain
all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and
regulations of the SEC. Reference is made to the Registration Statement and the exhibits thereto for further information with respect
to the Company and the Securities.
Statement
Regarding Forward-Looking Information
Certain information included in this prospectus
and the documents incorporated by reference herein are “forward-looking statements” within the meaning of the United States
Private Securities Litigation Reform Act of 1995 and under Canadian securities laws, including statements based on management’s
assessment and assumptions and publicly available information with respect to the Company. By their nature, forward-looking statements
involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic
conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. These forward-looking
statements include, but are not limited to, statements relating to revenue growth opportunities, including those referring to general
economic and business conditions; statements relating to the Company’s ability to meet debt repayments and future obligations in
the foreseeable future, including income tax payments, and capital spending; and statements relating to pension contributions. Forward-looking
statements could further be identified by the use of terminology such as the Company “believes”, “expects”, “anticipates”,
or “assumes”, or references to “outlook”, “plans”, “targets” or other similar words. Such
forward-looking statements are not guarantees of future performance and involve risks, uncertainties and other factors which may cause
the actual results or performance of the Company to be materially different from the outlook or any future results or performance implied
by such statements. Accordingly, readers are advised not to place undue reliance on forward-looking statements.
Important risk factors that could affect the forward-looking
statements include, but are not limited to the duration and effects of the COVID-19 pandemic, general economic and business conditions,
particularly in the context of the COVID-19 pandemic; industry competition; inflation, currency and interest rate fluctuations; changes
in fuel prices; legislative and/or regulatory developments; compliance with environmental laws and regulations; actions by regulators;
increases in maintenance and operating costs; security threats; reliance on technology and related cybersecurity risk; trade restrictions
or other changes to international trade arrangements; transportation of hazardous materials; various events which could disrupt operations,
including illegal blockades of rail networks and natural events such as severe weather, droughts, fires, floods and earthquakes; climate
change; labor negotiations and disruptions; environmental claims; uncertainties of investigations, proceedings or other types of claims
and litigation; risks and liabilities arising from derailments; timing and completion of capital programs; and other risks detailed from
time to time in reports filed by the Company with securities regulators in Canada and the United States, including its Annual Information
Form and Form 40-F. See the section of this prospectus entitled “Risk Factors” and the documents incorporated by
reference herein.
Forward-looking statements reflect information
as of the date on which they are made. The Company 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 Canadian securities laws. In the event the Company
does update any forward-looking statement, no inference should be made that the Company will make additional updates with respect to that
statement, related matters, or any other forward-looking statement.
The
Company
The Company is engaged in the rail and
related transportation business. The Company's tri-coastal network of 18,600 route miles of track spans Canada and the United States
of America (U.S.), connecting Canada’s Eastern and Western coasts with the U.S. South. The Company's extensive network and
efficient connections to all Class I railroads provide its customers access to Canada, the U.S. and Mexico. Essential to the
economy, to the customers, and to the communities it serves, the Company safely transports every year more than 300 million tons of
cargo, serving exporters, importers, retailers, farmers and manufacturers. The Company and its affiliates have been contributing to
community prosperity and sustainable trade since 1919. The Company is committed to programs supporting social responsibility and
environmental stewardship. The Company's freight revenues are derived from seven commodity groups representing a diversified and
balanced portfolio of goods transported between a wide range of origins and destinations.
Additional information about the Company’s
business is included in the documents incorporated by reference into this prospectus.
The Company’s registered and head office
is located at 935 de La Gauchetière Street West, Montreal, Quebec, H3B 2M9, and its telephone number is 1-888-888-5909. The Company’s
common shares are listed for trading on the Toronto Stock Exchange under the symbol “CNR” and the New York Stock Exchange
under the symbol “CNI”.
Use
of Proceeds
Except as may otherwise be set forth in a prospectus
supplement, the net proceeds from the sale of Securities will be used for general corporate purposes, including the redemption and refinancing
of outstanding indebtedness, share repurchases, acquisitions and other business opportunities.
Consolidated
Capitalization
The following table sets forth the consolidated
capitalization of the Company as at March 31, 2022. The consolidated capitalization of the Company does not give effect to the issuance
of Securities that may be issued pursuant to this prospectus and any prospectus supplement, since the aggregate principal amounts and
terms of such Securities are not presently known.
The data in the table below is derived from, and
should be read in conjunction with, the Company’s unaudited interim consolidated financial statements as at and for the three months
ended March 31, 2022 and the notes related thereto, incorporated by reference in this prospectus. There has been no material change
in the share and loan capital of the Company since March 31, 2022.
| |
As at
March 31, 2022 | |
| |
| in millions | |
Current portion of long-term debt | |
$ | 1,504 | |
Operating lease liabilities included within Accounts payable and other | |
| 108 | |
Long-term debt | |
| 11,879 | |
Operating lease liabilities | |
| 322 | |
Total debt | |
$ | 13,813 | |
Shareholders’ equity | |
| | |
Common shares | |
| 3,695 | |
Common shares in Shares trusts | |
| (88 | ) |
Additional paid-in capital | |
| 382 | |
Accumulated other comprehensive loss | |
| (2,280 | ) |
Retained earnings | |
| 20,143 | |
Total shareholders’ equity | |
| 21,852 | |
Total capitalization | |
$ | 35,665 | |
Earnings
Coverage Ratio
The following earnings coverage
ratios are calculated for the twelve-month periods ended December 31, 2021 and March 31, 2022 and give effect to the issuance of
all long-term debt of the Company and repayment or redemption thereof since the beginning of such twelve-month periods, as if such transactions
had occurred on the first day of such twelve-month periods. The adjusted earnings coverage ratios further exclude the effects of the terminated
merger agreement between the Company and Kansas City Southern, including the merger termination fee and transaction-related costs in order
to show the impact excluding these non-recurring items, which we believe is useful for investors. These earnings coverage ratios do not
give effect to the issuance of any Securities that may be issued pursuant to this prospectus and any prospectus supplement, since the
aggregate principal amounts and the terms of such Securities are not presently known.
|
|
Twelve
months
ended
December 31, 20213 |
|
Twelve
months
ended March 31,
20223 |
Earnings coverage ratio1 |
|
13.93 times |
|
13.76 times |
Adjusted earnings coverage
ratio2 |
|
12.32 times |
|
12.15 times |
Earnings coverage ratio is
equal to net income before interest and income taxes divided by interest expense on all debt. Adjusted earnings coverage ratio is equal
to net income before interest, income taxes, merger termination fee and transaction-related costs, divided by interest expense on all
debt. These ratios do not purport to be indicative of earnings coverage ratios for any future period.
The
Company’s interest expense requirements would have amounted to approximately $499 million for each of the twelve-month
periods ended December 31, 2021 and March 31, 2022. The Company’s net income before interest and income
taxes for the twelve-month periods ended December 31, 2021 and March 31, 2022, was $6,952 million3 and $6,866 million3,
respectively, which is 13.93 times3 and 13.76 times3 the Company’s interest expense requirements for
the applicable period. The Company’s net income before interest, income taxes, merger termination fee and transaction-related costs
for the twelve-month periods ended December 31, 2021 and March 31, 2022 was $6,150 million3 and $6,064 million3,
respectively, which is 12.32 times3 and 12.15 times3 the Company’s interest expense requirements for the
applicable period.
If the Company offers Securities
having a term to maturity in excess of one year under this prospectus and a prospectus supplement, the prospectus supplement will include
earnings coverage ratios giving effect to the issuance of such Securities and will reflect such other adjustments as may be required by
applicable Canadian securities law requirements.
1
Earnings coverage ratio is required by Item 6 of Form 44-101F1 of Regulation 44-101 respecting Short Form Prospectus Distributions,
which specifies its composition.
2 Adjusted
earnings coverage ratio is a non-GAAP measure and is not a standardized financial measure under U.S. GAAP used to prepare the
financial statements of the Company and might not be comparable to similar financial measures disclosed by other issuers. The
reconciliation of net income to net income before interest, income taxes, merger termination fee and transaction-related costs for
the twelve-month periods ended December 31, 2021 and March 31, 2022 and the computation of adjusted earnings coverage is
as follows:
| |
Twelve
months ended December 31,
2021 | | |
Twelve
months
ended
March 31,
2022 | |
Net income3 | |
| 4,899 | | |
| 4,841 | |
Add back: | |
| | | |
| | |
Interest | |
| 610 | | |
| 606 | |
Income tax3 | |
| 1,443 | | |
| 1,419 | |
Merger termination fee | |
| (886 | ) | |
| (886 | ) |
Transaction-related costs | |
| 84 | | |
| 84 | |
Net income before interest, income taxes, merger termination fee and transaction-related costs | |
| 6,150 | | |
| 6,064 | |
Interest expense requirements on all debt (note 1) | |
| 499 | | |
| 499 | |
Adjusted earnings coverage ratio | |
| 12.32 | | |
| 12.15 | |
Note 1: Interest expense requirements on all debt is the same number
used in the calculation of the earnings coverage ratio and is calculated as interest expense adjusted to annualize interest expense for
debt issuances during the year, exclude interest expense for debt redemptions during the year and remove bridge financing fees related
to the cancelled bridge loan agreement in connection with the terminated merger agreement with Kansas City Southern.
3
In the first quarter of 2022, the Company changed its method of calculating market-related values of pension assets for its defined benefit
plans using a retrospective approach. Figures as of December 31, 2021 reflect the change in methodology. See “Note 2 — Change
in accounting policy” to the Q1 2022 Interim Financial Statements for additional information.
Description
of Securities
The following description sets forth certain general
terms and provisions of the Securities. The Company may issue Securities either separately, or together with or upon the conversion of
or in exchange for other securities. The particular terms and provisions of each series of Securities the Company may offer will be described
in greater detail in the related prospectus supplement which may provide information that is different from this prospectus. The Company
reserves the right to include in a prospectus supplement specific variable terms pertaining to the Securities that are not within the
descriptions set forth in this prospectus. Senior Securities of the Company may be issued under a senior indenture dated as of July 12,
2013, between the Company and BNY Trust Company of Canada, as trustee (the “Canadian Senior Indenture”), or under a senior
indenture dated as of June 1, 1998, as amended and supplemented, between the Company and The Bank of New York Mellon, as trustee
(the “U.S. Senior Indenture” and together with the Canadian Senior Indenture, the “Senior Indentures”). Senior
Securities issued under the Canadian Senior Indenture will not be offered or sold to persons in the United States. Subordinated Securities
may be issued under a subordinated indenture, dated as of June 23, 1999, as amended and supplemented, between the Company and BNY
Trust Company of Canada, as trustee (the “Subordinated Indenture”). Securities may also be issued under new indentures between
the Company and a trustee or trustees as will be described in a prospectus supplement for such Securities. The Senior Indentures and the
Subordinated Indenture are sometimes referred to collectively as the “indentures”, and the trustees under the indentures are
sometimes referred to collectively as the “trustees”.
The following summary of certain provisions of
the indentures and the Securities is not meant to be complete and is subject to and qualified in its entirety by the detailed provisions
of the indentures. For more information, you should refer to the full text of the indentures and the Securities, including the definitions
of certain terms not defined herein, and the related prospectus supplement. Prospective investors should rely on information in the prospectus
supplement if it is different from the following information.
Unless otherwise indicated, references to the
“Company” in this description of Securities are to Canadian National Railway Company but not to any of its subsidiaries.
General
The indentures do not limit the aggregate principal
amount of Securities the Company may issue and do not limit the amount of other indebtedness the Company or any of its subsidiaries may
incur. The Company may issue Securities from time to time in separate series. Securities may also be issued pursuant to a medium-term
note program. Unless otherwise specified in a prospectus supplement,
| · | Securities will be unsecured obligations of the Company; |
| · | senior Securities will rank equally with all other unsecured and unsubordinated indebtedness of the Company; and |
| · | subordinated Securities will be subordinate, in right of payment, to all senior indebtedness (as defined in the Subordinated Indenture). |
The Company conducts a substantial portion of
its operations through its subsidiaries. Claims of creditors of the Company’s subsidiaries generally have priority with respect
to the assets and earnings of those subsidiaries over the claims of creditors of the Company, including holders of the Securities. The
Securities therefore will effectively be subordinated to creditors of the Company’s subsidiaries. The Securities will also be subordinated
to any liabilities of the Company that are secured by any of the Company’s assets including, without limitation, those under capital
leases.
A prospectus supplement will describe the terms
of any series of Securities the Company may offer and may include the following:
| · | the title of the Securities; |
| · | any limit on the aggregate principal amount of Securities that may be issued; |
| · | the date(s) of maturity and the portion (if less than all of the principal amount) of the Securities to be payable upon declaration
of acceleration of maturity; |
| · | the ranking of the Securities relative to our other liabilities and obligations; |
| · | whether the Securities are to be issued at an original issue discount; |
| · | the rate(s) of interest, if any, or the method of calculation, the date(s) interest will begin to accrue, the date(s) interest
will be payable and the regular record date(s) for interest payments or the method for determining such date(s); |
| · | the covenants applicable to the Securities; |
| · | any mandatory or optional sinking fund or analogous provisions; |
| · | the date(s), if, any, and the price(s) at which the Company is obligated, pursuant to any special mandatory redemption provisions
or otherwise, to redeem, or at a holder’s option to purchase, such series of Securities and other related terms and provisions; |
| · | the currency or currencies of any payments to be made on the Securities; |
| · | the period(s) within which, the price(s) at which, and the terms upon which, the Securities may be redeemed, in whole or
in part, at the option of the Company; |
| · | whether or not the Securities will be issued in global form, their terms and the depositary; |
| · | the terms upon which a global note may be exchanged in whole or in part for other Securities; |
| · | the terms, if any, under which the Securities are convertible into common shares or any other security of the Company; and |
| · | any other terms of the series of Securities. |
In addition to new issues of Securities, this
prospectus may be used in connection with the remarketing of outstanding Securities, in which case the terms of the remarketing and of
the remarketed Securities will be set forth in the prospectus supplement.
Conversion or Exchange of Securities
If applicable, the prospectus supplement will
set forth the terms on which a series of Securities may be converted into or exchanged for other securities of the Company. These terms
will include whether conversion or exchange is mandatory, or is at the option of the holder or of the Company. The Company will also describe
in the prospectus supplement how it will calculate the number of securities that holders of Securities would receive if they convert or
exchange their Securities.
Events of Default
Under the indentures, an “event of default”
with respect to any series of Securities includes any of the following:
| · | failure to pay any principal or premium, when due; |
| · | failure to pay any interest when due, and this failure continues for 30 days; |
| · | failure to pay any sinking fund installment when due; |
| · | failure to perform any covenant or agreement relating to the Securities or in the applicable indenture, and the failure continues
for 90 days (60 days in the case of series of Securities issued under the Subordinated Indenture) after written notice by the trustee
or by holders of at least 25% in aggregate principal amount outstanding; |
| · | certain events of bankruptcy, insolvency or reorganization; and |
| · | any other event of default provided for that series of Securities. |
If an event of default occurs and is continuing,
either the trustee or the holders of at least 25% in principal amount of the outstanding Securities of any series affected by the default,
may notify the Company (and the trustee, if notice is given by the holders) and declare that the unpaid principal is due and payable immediately.
However, subject to certain conditions, the holders of a majority in aggregate principal amount of the Securities of the affected series
can rescind and annul this declaration for accelerated payment. The Company will furnish the trustees with an annual certificate as to
compliance with certain covenants contained in the particular indenture.
No event of default with respect to any particular
series of securities necessarily constitutes an event of default with respect to any other series of securities. In particular, for each
series of securities originally issued prior to November 20, 2012 under the Senior Indentures, an “event of default”
also includes the failure to pay principal when due, or acceleration, of any indebtedness of the Company in an aggregate principal amount
exceeding $75 million, and such acceleration is not rescinded or annulled within 30 days after written notice by the trustee or holders
of at least 25% in aggregate principal amount outstanding. In addition, for each series of securities originally issued prior to November 20,
2012, an event of default occurs upon the failure to perform any covenant or agreement relating to the securities or in the applicable
indenture if the failure continues for 60 days instead of the 90 days for the Securities.
Subordinated Securities
The terms of a series of subordinated Securities
will be set forth in the relevant indenture and the prospectus supplement. The subordinated Securities will be unsecured obligations of
the Company and will be subordinate in right of payment to Securities issued under the Senior Indentures and certain other indebtedness
of the Company.
Satisfaction and Discharge of Indentures
The Company may terminate its obligation with
respect to a series of Securities under the indentures if:
| · | all the outstanding Securities of a series have been delivered to the trustee for cancellation; |
| · | the Company has paid all sums it is required to pay under the respective indenture; or |
| · | the Company deposits with the trustee, in trust, sufficient funds, or governmental securities, to cover payments due on all Securities
of such series for principal, premium, if any, and interest and any other sums due under the applicable indenture to the stated maturity
date or a redemption date of the Securities. |
Such defeasance is subject to the Company meeting
certain conditions set forth in the indentures.
Modification and Waiver
The Company and the trustees may modify or amend
the indentures by obtaining approval by the holders of at least a majority of the aggregate principal amount of the outstanding Securities
of each series that is affected. However, certain changes cannot be made without the consent of the holders of all outstanding Securities
affected by such changes. In particular, the holders of all outstanding Securities so affected must consent to changes in:
| · | the stated maturity date; |
| · | the principal, premium, or interest payments, if any; |
| · | the place or currency of any payment; |
| · | the rights of holders to enforce payment; |
| · | the percentage in principal amount of outstanding Securities of any series, the consent of whose holders is needed to modify, amend
or waive certain provisions of the indentures or certain defaults; or |
| · | if applicable, the subordination provisions. |
Except as otherwise specified for a series of
Securities, the holders of at least a majority in aggregate principal amount of the outstanding Securities of any series issued can waive,
or cause the trustees, on behalf of the holders of the entire series, to waive compliance with certain provisions of the relevant indenture.
In addition, holders of at least a majority in principal amount of the outstanding Securities of a series can consent to, or cause the
trustees to waive any past default under the relevant indentures, except for the following:
| · | a default in any payments due under the relevant indenture; and |
| · | a default under an indenture provision that can be modified or amended only with the consent of each holder of an outstanding series
of Securities. |
For each series of securities originally issued
under the U.S. Senior Indenture prior to November 20, 2012, consent of the holders of at least 662/3 in aggregate principal amount
of the outstanding securities of that series is required for modifications, amendments or waivers.
Consolidation, Merger and Sale of Assets
Each indenture provides that the Company may consolidate,
amalgamate or merge with or into any other corporation or sell, convey or lease all or substantially all of its property to any other
corporation authorized to acquire and operate the same; provided that upon any such consolidation, amalgamation, merger, sale, conveyance
or lease, (i) the successor entity (if other than the Company) is organized under the laws of a Canadian or U.S. jurisdiction; (ii) the
payment of the principal and premium, if any, and interest on all of the Securities according to their terms, and the performance of all
the covenants and conditions under that indenture to be performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory to the relevant trustee, by the corporation (if other than the Company) formed by such consolidation or amalgamation, or
into which the Company shall have been merged, or by the corporation which shall have acquired or leased such property; and (iii) no
event of default or event that could give rise to an event of default will have occurred and be continuing.
Restrictions on Secured Debt
The Company has covenanted in the Senior Indentures
that it will not, nor will it permit a subsidiary to, create, issue, incur, assume or guarantee, any indebtedness for money borrowed,
or guarantees of such indebtedness, now or hereafter existing which is secured by any mortgage, pledge, hypothec, lien, security interest,
privilege, conditional sale or other title retention agreement or similar encumbrance (a “Mortgage”) on any present or future
Railway Properties of the Company or on any shares of stock of any Railroad Subsidiary (“Secured Debt”), without first making
effective provision whereby all outstanding Securities issued thereunder shall be secured by the Mortgage equally and ratably with such
other indebtedness or guarantee thereby secured unless, after giving effect to such creation, issuance, incurrence, assumption or guarantee,
the sum of the aggregate amount of all outstanding Secured Debt of the Company and its subsidiaries would not exceed an amount equal to
10% of the Consolidated Net Tangible Assets. For Secured Debt that provides for an amount less than the principal amount thereof to be
due and payable upon the acceleration of its final maturity, the principal amount of the Secured Debt at any time its principal amount
is measured shall be the principal amount due and payable on the Secured Debt if the Secured Debt were to be accelerated at that time.
The negative pledge covenant is also subject to certain exceptions. For example, this restriction excludes any Mortgage upon Railway Properties
existing or created at the time the Railway Properties are acquired, or Mortgages existing on the shares or to secure indebtedness of
a corporation at the time such corporation becomes a subsidiary, and any extension, renewal or replacement of any such Mortgage. As used
in such covenant, the term “Railway Properties” means all main and branch lines of railway located in Canada or the United
States, including all real property used as the right of way for such lines; the term “Railroad Subsidiary” means a subsidiary
whose principal assets are Railway Properties; the term “subsidiary”, subject to certain exceptions, means a corporation a
majority of the outstanding voting shares of which are owned, directly or indirectly, by the Company or by one or more subsidiaries of
the Company, or by the Company and one or more subsidiaries of the Company; and the term “Consolidated Net Tangible Assets”
means, at any date, the total amount of assets of the Company determined on a consolidated basis after deducting all liabilities due within
one year, all goodwill, trade names, trademarks, patents, unamortized debt discount and expenses and other like intangibles and all appropriate
adjustments on account of minority interests of other persons holding stock of the subsidiaries, as set forth or reflected on the most
recent consolidated balance sheet of the Company. The 10% of the Consolidated Net Tangible Assets exclusion does not apply in the case
of series of securities originally issued under the Senior Indentures prior to November 20, 2012.
Plan
of Distribution
The Company may sell the Securities to or through
underwriters or dealers purchasing as principals or through agents.
The applicable prospectus supplement will identify
each underwriter, dealer or agent engaged by the Company in connection with the offering and sale of the Securities and will set forth
the terms of the offering of such Securities and the method of distribution, including, to the extent applicable, the proceeds to the
Company from the sale of the Securities, any public offering price, any delayed delivery arrangements, any fees, discounts, commissions
or any other compensation payable to underwriters, dealers or agents and any other material terms of the plan of distribution. Any initial
public offering price and any fees, discounts, commissions or any other compensation payable to underwriters, dealers or agents may be
changed from time to time. Unless otherwise set forth in the prospectus supplement relating thereto, the obligations of the underwriters
to purchase the Securities will be subject to certain conditions and the underwriters will be obligated to purchase all of the Securities
if any are purchased.
The Securities may be sold from time to time in
one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time of sale, or at prices
related to such prevailing market prices or at negotiated prices.
Underwriters, dealers and agents who participate
in the distribution of the Securities may be entitled under agreements to be entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under securities legislation, or to contribution with respect to payments which such
underwriters, dealers or agents may be required to make in respect thereof. Such underwriters, dealers and agents may be customers of,
engage in transactions with or perform services for, the Company in the ordinary course of business.
Unless otherwise specified in the applicable prospectus
supplement, each issue of Securities will be a new issue of Securities with no established trading market. There is currently no market
through which the Securities may be sold and purchasers may not be able to resell the Securities purchased under this prospectus and the
prospectus supplement relating to such Securities. This may affect the pricing of such Securities in the secondary market, the transparency
and availability of trading prices, the liquidity of the Securities and the extent of issuer regulation. Subject to applicable laws, certain
dealers may make a market in the Securities, but will not be obligated to do so and may discontinue any market making at any time without
notice. No assurance can be given that any broker-dealer will make a market in the Securities or as to the liquidity of the trading market
for the Securities.
If so indicated in the applicable prospectus supplement,
the Company may authorize dealers or other persons acting as agents to solicit offers by certain institutions to purchase the Securities
directly from the Company pursuant to contracts providing for payment and delivery on a future date. These contracts will be subject only
to the conditions set forth in the applicable prospectus supplement which will also set forth the commission payable for solicitation
of such contacts.
One or more firms, referred to as “remarketing
firms”, may also offer or sell Securities, if the prospectus supplement so indicates, in connection with a remarketing arrangement
upon their purchase. Remarketing firms will act as principals for their own accounts or as agents for the Company. These remarketing firms
will offer or sell the Securities pursuant to the terms of the Securities. The prospectus supplement will identify any remarketing firm
and the terms of its agreement, if any, with the Company and will describe the remarketing firm’s compensation. Remarketing firms
may be deemed to be underwriters in connection with the Securities they remarket. Remarketing firms may be entitled under agreements that
may be entered into with the Company to indemnification by the Company against certain civil liabilities, including liabilities under
securities legislation, or to contribution in respect thereof, and may be customers of, engage in transactions with or perform services
for the Company in the ordinary course of business.
Risk
Factors
Investment in the Securities is subject to a number
of risks. Before deciding whether to invest in any Securities, prospective investors should carefully consider the information contained
in, or incorporated by reference in, this prospectus, including, without limitation, the risks identified and discussed in the AIF, the
2021 MD&A and the Q1 2022 MD&A of the Company which are incorporated by reference in this prospectus and those described or incorporated
by reference in a prospectus supplement relating to a specific offering of Securities.
Taxation
The applicable prospectus supplement will describe
the material Canadian and United States federal income tax consequences to an initial investor acquiring the Securities, including whether
payments of principal, premium, if any, and interest in respect of the Securities will be subject to Canadian non-resident withholding
tax and any such consequences relating to Securities payable in a currency other than United States dollars, Securities that are issued
at an original issue discount or subject to early redemption or other special terms.
Legal
Matters
Unless otherwise specified in the prospectus supplement
relating to a particular offering of Securities, certain legal matters will be passed upon for the Company by the Executive Vice-President,
Corporate Services and Chief Legal Officer of the Company and by Stikeman Elliott LLP. The validity of Securities governed by New York
law will be passed upon for the Company by Davis Polk & Wardwell LLP, New York, New York. Davis Polk & Wardwell LLP
may rely on the opinion of the Executive Vice-President, Corporate Services and Chief Legal Officer of the Company as to all matters of
Canadian federal and Quebec laws.
Enforcement
of Judgments Against Foreign Persons
Jo-ann dePass Olsovsky, Denise Gray, Justin M.
Howell, James E. O’Connor and Laura Stein, directors of the Company, reside outside of Canada. They have appointed Canadian National
Railway Company, 935 de La Gauchetière Street West, Montreal, Quebec H3B 2M9, attention Corporate Secretary, as agent for service
of process in Canada. Purchasers are advised that it may not be possible for investors to enforce judgments against any person that resides
outside of Canada, even if the party has appointed an agent for service of process.
Independent
Auditors
KPMG LLP, Montreal, Quebec, is the external auditor
who prepared the Reports of Independent Registered Public Accounting Firm to the Shareholders and Board of Directors of the Company on
the consolidated balance sheets of the Company as of December 31, 2021 and 2020 and the related consolidated statements of income,
comprehensive income, changes in shareholders’ equity and cash flows for each of the years in the two-year period ended December 31,
2021 and the related notes, and the effectiveness of internal control over financial reporting as of December 31, 2021, incorporated
by reference in this prospectus. KPMG LLP have confirmed with respect to the Company that they are independent within the meaning of the
relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation
or regulation.
Enforceability
of Civil Liabilities Under the U.S. Federal Securities Laws
The Company is a Canadian company and is governed
by the laws of Canada. A substantial portion of its assets are located outside the United States and a majority of its officers and directors
and of the experts named herein are residents of Canada. As a result, it may be difficult for investors to effect service within the United
States upon the Company and those directors, officers and experts, or to realize in the United States upon judgments of courts of the
United States predicated upon civil liability of the Company and such directors, officers or experts under the United States federal securities
laws. The Company has been advised by its Chief Legal Officer that there is doubt as to the enforceability in a Canadian court in original
actions, or in actions to enforce judgments of United States courts, of civil liabilities predicated upon United States federal securities
laws.
Documents
Filed As Part of the Registration Statement
The following documents have been filed with the
SEC as part of the Registration Statement of which this prospectus is a part: (i) the documents listed in the first paragraph under
“Documents Incorporated by Reference”; (ii) the consent of KPMG LLP, independent registered public accounting firm; (iii) powers
of attorney from directors and officers of the Company; (iv) the U.S. Senior Indenture, the Canadian Senior Indenture and the Subordinated
Indenture; and (v) Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of The Bank of New York Mellon, as
trustee under the U.S. Senior Indenture.
US$
Canadian National Railway Company
US$ %
Notes due 20
US$ %
Notes due 20
PRELIMINARY
PROSPECTUS SUPPLEMENT
,
2022
Joint Book-Running Managers
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