CN, IC and BMWE Negotiate Implementing Agreement for CN/IC Merger - BMWE Agrees to Back Transaction.

MONTREAL, CHICAGO and SOUTHFIELD, Mich.--(BUSINESS WIRE)-- Oct. 2, 1998--Canadian National Railway Company (TSE: CNR) (NYSE: CNI), Illinois Central Corporation (NYSE: IC) and the Brotherhood of Maintenance of Way Employees have reached an agreement resolving all labor issues related to the proposed merger of the CN and IC.

The BMWE stated today it will actively support the CN/IC merger application before the U.S. Surface Transportation Board and other governmental bodies. CN/IC filed its merger application with the STB on July 15, 1998.

Under the implementing agreement approved by the BMWE, all existing collective bargaining agreements in the U.S. on the merged properties will remain in place as an agreed-to condition of the merger. BMWE and CN have also agreed to good-faith negotiations to deal with any other merger issues. This is in addition to the protections afforded to railroad workers affected by mergers. The existing IC/BMWE agreement will apply to affected employees in the Chicago terminal area 30 days after the STB approves the merger transaction. CN also agreed to maintain service on certain Canadian track and satisfy the interests of Canadian BMWE members.

The parties will formally sign the agreement on Oct. 5, 1998.

The CN/IC transaction is an end-to-end merger, with the two carriers meeting in Chicago.

CN President and Chief Executive Officer Paul M. Tellier said: "This implementing agreement is the first one signed by CN/IC and its labor organizations in the United States. I am delighted with the speed at which the mutually-beneficial agreement was signed and thank the BMWE for deciding to actively support the merger transaction. The transaction is about greater rail competition, and increased customer reach. It will avoid network restructuring, line abandonments and reductions in service."

IC President and Chief Executive Officer John D. McPherson said: "The implementing agreement with the BMWE shows that CN/IC is serious about addressing labor issues in the proposed transaction and reaching a settlement that is in the interests of both management and labor."

BMWE President Mac Fleming said: "I want to express my appreciation to CN/IC for stepping forward and negotiating a fair implementing agreement that truly protects the interest of BMWE members while CN and IC merge their operations.

"This is the first merger of Class 1 railroads that the BMWE ever actively supported. That fact is testimony to the merits of this implementing agreement and demonstrates that labor and management are able to cooperate and advance the interests of the industry and its employees in a mutually beneficial manner when the will and skill is there on both sides of the table."

Canadian National serves all of Canada and the U.S. Midwest, including the ports of Vancouver, Montreal and Halifax, and the key cities of Toronto, Chicago, Detroit and Buffalo, with connections to all points in North America.

Illinois Central's rail network consists of approximately 3,370 route-miles of track running north-south between Chicago and the Gulf of Mexico, and east-west between Chicago and Nebraska and Iowa.

The BMWE is the organization that represents maintenance of way employees, the workers who construct and maintain railroads' bridges, buildings and track and repair track equipment. BMWE has 45,000 members in the U.S. and Canada.