Canadian National to Help Short Lines Tap Rail Infrastructure Improvement Funds.

Business Editors

WASHINGTON D.C.--(BUSINESS WIRE)--March 15, 2001

Canadian National (NYSE:CNI)(TSE:CNR.) will work closely with its United States short-line partners to help them secure federal rail infrastructure improvement funds, says Paul M. Tellier, CN's president and chief executive officer.

Tellier announced the initiative in a speech last night to the American Short Line and Regional Railroad Association, which presented Tellier with its Partnership Award at a dinner here.

Tellier said CN will "strongly support" the short-line industry's lobbying campaign for legislation to provide federal funding to underwrite infrastructure improvements so that the industry can accommodate loaded freight cars weighing up to 286,000 pounds.

In the meantime, Tellier said, CN is prepared to explore with its U.S. short-line connections innovative ways to help them get better access to the existing US$3.5-billion Railroad Rehabilitation and Improvement Financing Program (RRIF). Certain financial requirements of the RRIF program, including up-front cash payments known as credit risk premiums, have made it difficult for short lines to qualify for the program.

"We're looking for creative options - thinking outside the box, doing things differently," Tellier said.

To help short lines to qualify for low-cost RRIF loans, CN said it could:

-   Help shoulder a portion of the up-front cash payments, or credit
    risk premiums, RRIF requires;

-   Tie new traffic in heavier rolling stock to future short-line loan
    payments;

-   Guarantee traffic patterns to lower the RRIF credit risk premium.

CN last year agreed to provide US$2.4 million to the Columbus and Greenville Railway (C&G) in Mississippi to help it upgrade its rail infrastructure. Over the next 10 years, a major C&G shipper, Delta Western Feed Mill, Inc., will use CN to route a substantial portion of grain and grain products to its plant in Indianola, Miss.

Tellier said CN is working to improve the efficiency of traffic interchanges with its short-line partners and to help them upgrade systems so they can become stronger links in CN's continent-wide rail network.

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 key cities of Toronto, Buffalo, Chicago, Detroit, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America.