California to receive more than $350 million investment from merger of SP-UP.

SAN FRANCISCO--(BUSINESS WIRE)--March 12, 1996--California will benefit from investments totalling more than $350 million following the merger of Union Pacific Railroad and Southern Pacific Rail Corporation, executives of the two companies will report tomorrow at a workshop to be held here by the California Public Utilities Commission to obtain public comments on the proposed merger.

"The combination of these two railroads will yield substantial benefits for the State of California," said Dick Davidson, President and Chief Operating Officer of Union Pacific Corporation. "We have identified significant service improvements for our California customers resulting from the merger, from construction of new facilities to major upgrading on several routes in the state."

"Equally important for the recovering California economy will be the injection of more than $350 million we intend to invest to achieve those service improvements," Davidson added.

Robert F. Starzel, Vice Chairman of San Francisco-based Southern Pacific, said, "History is clear: railroads enabled California to build an astounding economy. Without the merger of SP and UP, California will lack transportation alternatives necessary to its continued well-being. Transportation costs become part of the price of goods for consumers. It is only through this merger and the investments it will generate that both SP and UP rail systems can reduce their costs, while improving their service and competing with the newly merged Burlington Northern/Santa Fe."

Individual projects included in the $350 million-plus California total are: -0-

-- $95 million to upgrade SP's Sunset route between Los Angeles and Yuma, which is part of a larger $221 million upgrading of the SP route from Los Angeles to El Paso;

-- $67 million for a new Inland Empire intermodal facility near San Bernardino;

-- $38 million to expand and improve SP's Roseville yard, just east of Sacramento;

-- $21 million to upgrade and return to service the SP Mococo Line between Martinez and Tracy;

-- $27 million to expand SP's Intermodal Container Transfer Facility near the Los Angeles-Long Beach harbor.

-- Additionally, approximately $89 million is to be invested in California on terminal expansions and improvements, track and signal upgrading and tunnel clearance expansion projects. -0-

On a combined basis, Southern Pacific and Union Pacific would have approximately 8,200 California employees, some 4,000 miles of track and annual payroll of $400 million.

The proposed merger is under review by the Surface Transportation Board in Washington, D.C. The STB succeeded the former Interstate Commerce Commission in January. A second California PUC workshop is scheduled for Friday, March 15, in Los Angeles.

CONTACT: Southern Pacific Rail Corporation

Mike Furtney, 415/541-1652

or

Union Pacific Railroad

John Bromley, 402/271-3475