Canadian Pacific Railway and RailAmerica Complete Transfer of Vancouver Island Rail Network.

BOCA RATON, Fla.--(BUSINESS WIRE)--Jan. 8, 1999--Canadian Pacific Railway (CPR) and RailAmerica, Inc. (Nasdaq/NNM:RAIL) Friday announced that they have completed the transfer of the 290-km (181-mile) Esquimalt and Nanaimo Railway Company (E&N) on British Columbia's Vancouver Island to RailAmerica's newly formed subsidiary, the E&N Railway Company (1998) Ltd. (ENR).

The transaction includes the sale of the 109-km (68-mile) section of rail line between Port Alberni and Nanaimo, and the lease of the Victoria-to-Nanaimo and Parksville-to-Courtenay segments of the E&N network, about 181 km (113 miles). Terms of the transaction were not disclosed.

ENR, the new rail operator on Vancouver Island for RailAmerica, expects to handle approximately 8,000 carloads of freight during its first twelve months of operation. Commodities moved by ENR include forest/paper products, mineral and chemical products.

The VIA Rail passenger service on the ENR will continue to operate as before.

"As a company with significant experience in the operation of short line railroads, RailAmerica and the new E&N Railway will enhance the prospects of both the freight and passenger service on Vancouver Island," said Ed Dodge, executive vice-president of CPR.

CPR and RailAmerica are committed to working with the Vancouver Island Railway Society (VIRS), all levels of government, VIA Rail and other stakeholders to enhance passenger service on Vancouver Island. The two companies will contribute $25,000 Cdn. to VIRS in support of its efforts to improve passenger rail service on Vancouver Island.

Gary O. Marino, RailAmerica's Chairman, President and Chief Executive Officer, added: "We are delighted to conclude our negotiations, to be investing in British Columbia and to establish this new business relationship with Canadian Pacific Railway. As we commence operations under the new ENR banner in 1999, we look forward to working with CPR and freight shippers on Vancouver Island to enhance rail service and expand franchise opportunities through the implementation of intermodal and transload business. In addition, we are dedicated to working with VIRS, the local communities and VIA Rail Canada to expand passenger rail service on Vancouver Island."

The two companies announced Sept. 21 that they had signed a letter of intent to transfer the E&N to RailAmerica. The transfer of the E&N will affect 45 employees, who will either work for ENR or remain with CPR.

Calgary-based CPR, a subsidiary of Canadian Pacific Limited, operates about 25,000 km (15,500 miles) of track in Canada and the U.S. The railway has about 20,000 employees and annual revenues of $3.7 billion Cdn. CPR's Website address is: http://www.cpr.ca

RailAmerica, Inc. is a diversified international transportation company operating 13 railroads over approximately 4,160 route km (2,600 route miles) in eight U.S. states, Canada and the Republic of Chile. The Company holds a minority equity interest in the transcontinental Australian passenger rail service and owns Kalyn/Siebert, Inc., a specialty truck trailer manufacturer with production facilities in Gatesville, Texas and Trois-Rivieres, Quebec, Canada. Receive RailAmerica's latest news and other corporate information by visiting its website at www.railamerica.com.

This press release contains forward-looking statements regarding future events and the future performance of the companies that involve risks and uncertainties that could cause actual results to differ materially, including, but not limited to, economic conditions, customer demand, increased competition in the relevant market, and others. We refer you to the documents that the companies file from time to time with the Securities and Exchange Commission, such as the Form 10-K, Form 10-Q and Form 8-K reports of RailAmerica, and Form 40-F and Form 6-K reports of Canadian Pacific Railways Company, in the United States, which contain additional important factors that could cause its actual results to differ from its current expectations and from the forward-looking statements contained in this press release.