CN Reaches Agreement to Convey Montreal-Ottawa Line to VIA Rail.

MONTREAL--(BUSINESS WIRE)--June 10, 1998--(ME:CNR.)(TSE:CNR.) (NYSE:CNI) Canadian National announced today it has concluded an agreement to convey to VIA Rail Canada Inc. its Alexandria Subdivision from Coteau, Que., near Montreal, to Hawthorne, Ont., located in the east end of Ottawa. The agreement excludes CN's Ottawa Terminal properties.

"This agreement underscores the close partnership that exists between the two companies," said CN President and Chief Executive Officer Paul M. Tellier. "It will enable VIA to maintain and enhance passenger service in this key corridor between Montreal and the Ottawa area, while allowing CN to retain access to shippers in the Ottawa Valley region."

CN retains exclusive rights to operate local and overhead freight trains on the Alexandria Subdivision, upon a running rights payment to VIA.

Under the agreement, CN has the authority to assign its freight rights over the Alexandria Subdivision to a short-line railway company that agrees to acquire CN's freight-only Beachburg Subdivision between Ottawa and Pembroke, Ont. CN recently announced plans to sell the Beachburg Subdivision to a short-line operator. Freight traffic would be interchanged with CN at Coteau.

"The conveyance of the Alexandria to VIA and the sale of the Beachburg to a short-line operator will provide local shippers with continuous access to continental freight services. It will also provide opportunities for the short line to generate new traffic by providing local customer-focused rail service," added Tellier.

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

CONTACT: Canadian National Railway Company

Mark Hallman, 416/217-6390