Canadian National Obtains Common Stock in 360networks Communications Company.

Business Editors

MONTREAL--(BUSINESS WIRE)--March 22, 2000

(TSE:CNR.) (NYSE:CNI) Canadian National announced today it has exchanged its minority interests in two joint-venture companies controlled by 360networks inc. for common stock of 360networks, formerly Worldwide Fiber Inc. The share exchange agreement was reached in connection with 360networks' planned initial public offering.

CN is expected to receive approximately 9.4 million shares of 360networks, a number subject to adjustment depending on the ultimate market value of 360networks' IPO expected later this spring. According to the terms of the agreement with 360networks and securities regulations, it is not anticipated that CN will sell its holdings in 360networks within 12 months of the communications company's IPO.

360networks is developing a worldwide fiber-optic network. CN and wholly-owned subsidiary Illinois Central Corporation (IC) signed agreements last year to establish two fiber-optic cable joint ventures with 360networks. The agreements granted the joint ventures preferred access to CN and IC rights-of-way to develop fiber optic transmission systems.

Claude Mongeau, CN's senior vice-president and chief financial officer, said: "We are very pleased with this major transaction. It is a good example of our efforts to generate additional cash flow and earnings from a CN asset base otherwise dedicated to rail activities."

The 360networks-controlled joint ventures installed more than 1,000 kilometers of fiber-optic network on CN rights-of-way last year. Key projects in 2000 are linking Quebec City and Halifax, and Chicago and New Orleans, with more than 2,500 kilometers of additional network.

As part of these two projects, CN is receiving fiber-optic strands for its own rail purposes. Once construction is complete, CN will have an uninterrupted North American fiber-optic-based communications network on its rights-of-way between Vancouver, Halifax and New Orleans.

Mongeau said: "Our relationship with 360networks is also benefiting CN railway operations, providing a leading-edge communications system across CN's North American network. This will be a unique asset, helping CN manage its telecommunications and train operations more effectively."

Canadian National Railway Company spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key cities of Toronto, Buffalo, Chicago, Detroit, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America.

360networks (formerly known as Worldwide Fiber Inc.) of Vancouver, B.C., offers broadband network services for telecommunications companies, ISPs, application service providers and data-centric enterprises. 360networks is completing a technologically advanced 90,300-kilometer (56,100-mile) network, including a fiber-optic terrestrial network in North America and Europe and underseas cables linking North America, South America and Europe. 360networks and its predecessors have been developing communications networks since 1988.