Canadian National Puts Temporary Hold On Additional Prairie Branch-line Abandonments.

MONTREAL--(BUSINESS WIRE)--June 30, 1999--

Canadian National (CN)(ME:CNR.)(TSE:CNR.)(NYSE:CNI) announced today it will delay new Prairie branch-line discontinuance applications until a stakeholders' group completes work on ways to implement recommended reform of Canada's grain handling and transportation system.

CN is a member of the stakeholders' group, chaired by Arthur Kroeger, which is charged with finding ways to move forward grain transportation reforms recommended by Justice Willard Estey earlier this year. Mr. Kroeger is scheduled to report to the federal minister of transport by Sept. 30, 1999.

CN's temporary moratorium on new line discontinuances follows a request for such a delay by Canada's western premiers.

CN Said It Will Also:

- Continue negotiations with groups interested in acquiring sections of the Mantario-White Bear-Elrose subdivisions in central Saskatchewan, and suspend further discontinuance steps affecting these lines while the Kroeger committees are still at work;

- Await the Canadian Transportation Agency's (CTA) decisions on the net salvage value of the Arborfield, Chelan and Cudworth subdivisions in Saskatchewan. These lines are nearing the end of the discontinuance process established by the Canada Transportation Act, and area governments have agreed to purchase the lines, pending the CTA's pricing decisions;

- Delay salvaging the Imperial subdivision in Saskatchewan during the Kroeger process;

- Continue negotiations to close the sale of the western section of the Tisdale subdivision, in central Saskatchewan, to area interests.

"These initiatives underscore CN's resolve to work fairly and openly with groups seeking to buy Prairie branch lines that are surplus to CN's needs," said CN President and Chief Executive Officer Paul M. Tellier.

"The steps CN has taken to rationalize its trackage in western Canada have clearly benefited shippers. Since the Canada Transportation Act was implemented in 1996, CN has reduced its western Canadian network by 3,440 miles, transferring 2,935 miles of track to new operators while abandoning 505 miles. Many miles of track that would have otherwise been abandoned have been transformed into short-line railroads. This would not have been the case without federal legislation making it easier to establish new short lines."

"CN is committed to work with all stakeholders to bring the Kroeger process on grain transportation reform to a successful conclusion," Tellier said. "CN believes a new, commercially-driven grain logistics system must work to the advantage of all participants, and goodwill is required of everyone. CN's actions reflect a spirit of cooperation."

Canadian National Railway Company 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.