CN Transfers Grande Prairie, Grande Cache and Smoky subdivisions to Genesee Rail-One.

EDMONTON, Alberta--(BUSINESS WIRE)--Oct. 9, 1998--Canadian National (TSE:CNR.) (ME:CNR.) (NYSE:CNI) announced today that it has reached an agreement in principle to transfer 586 kilometres (364 miles) of track located north of Jasper, Alta., to Genesee Rail-One.

The network, consisting of CN's Grande Prairie, Grande Cache and Smoky subdivisions, serves shippers in the coal, forest, industrial products and grain industries and transports about 50,000 carloads of freight traffic annually. The trackage begins 58 kilometres (36 miles) northeast of Jasper and runs north to Grande Prairie, where the network splits, with one line running northwest to Hythe and another northeast to Tangent.

The southern portion of this line was formerly known as the Alberta Resources Railroad until 1992, when CN purchased it from the Government of Alberta. CN has also reached an agreement with the Government of Alberta to complete the financial aspects of this transaction with the Province.

"The creation of this shortline will strengthen the competitiveness of shippers in north-west Alberta and the Peace River region," said Francois Hebert, assistant vice-president, business planning and network restructuring. "Short-line railways excel at cost- effective, customer-focused service on light-density lines, and are very successful at generating new rail business. Genesee Rail- One's new operation will connect with CN's North American network, benefiting from CN's long-haul efficiencies and reaching domestic markets and key international ports."

The start-up of the new shortline is scheduled to take place by the end of the year, concurrently with the implementation of the CN - BC Rail bridging agreement, signed in May 1998 for grain traffic originating at Dawson Creek bound for Vancouver and Prince Rupert.

The transfer of the subdivisions will affect 56 CN employees, who have a number of options available to them under their collective agreements.

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.