Canadian National to Offer Approximately US$450 Million in Common Shares and Convertible Preferred Securities.

MONTREAL--(BUSINESS WIRE)--June 2, 1999--

Canadian National Railway Company (CN) (ME:CNR)(TSE:CNR)(NYSE:CNI) announced today it is filing preliminary short form prospectuses with securities regulators in Canada and registration statements with the Securities and Exchange Commission in the United States for proposed offerings of common shares and convertible preferred securities in the aggregate amount of approximately US$450 million.

CN is offering four million common shares (to raise approximately US$250 million) and US$200-million of convertible preferred securities. The offerings of common shares and convertible preferred securities are not conditioned upon each other.

Net proceeds will be used to reduce CN's outstanding debt, giving the Company greater flexibility to finance future strategic investments and new business opportunities as they arise.

The offerings will be co-led by Goldman, Sachs & Co. and Nesbitt Burns Inc. in Canada and the United States. CN expects, subject to the results of the marketing process, a generally equal allocation of common and convertible preferred securities between sales in Canada and the United States.

The convertible preferred securities will be convertible into common shares by the holder at any time at a premium over the CN share price at issuance. On or after the third anniversary of the convertible preferred securities issuance, CN will have the option, upon notice, if the common shares are trading at a premium to be determined over the conversion price, to terminate conversion rights. The securities, to be subordinated debt securities of CN, will have a 30-year term and will permit CN to defer interest payments for up to 20 consecutive quarters.

Canadian National operates track in eight Canadian provinces and six U.S.states, with principal routes to every major metropolitan area in Canada and to the major U.S. rail hubs of Buffalo, Detroit, Duluth/Superior, Wis., and Chicago. CN is North America's only transcontinental railroad, and Canada's largest railroad serving all five major Canadian ports on the Atlantic and Pacific oceans and the Great Lakes.

The U.S. Surface Transportation Board on May 25 issued its final written decision approving CN's acquisition of Illinois Central Corporation. CN will assume control of IC routes and assets on June 24, and launch a step-by-step integration of the two railroads July 1.

Illinois Central Corporation, whose principal subsidiary is the Illinois Central Railroad Company, operates track running north-south between Chicago and the Gulf of Mexico, and east-west between Chicago, Iowa and Nebraska. IC's main north-south route reaches the major metropolitan areas of St. Louis, Memphis, New Orleans and Baton Rouge, La. IC's east-west route extends from Sioux City, Iowa, and Omaha, Neb., to Chicago.

Registration statements relating to these securities are being filed with the U.S. Securities and Exchange Commission and have not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statements become effective. This communication shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any State in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such State.