- CN (CNR) and KCS emphasize compelling case for pro-competitive combination in STB filing, now awaiting a final ruling on voting trust
- The voting trust prevents unlawful and premature control of KCS, allows KCS to maintain independence and protects KCS’ financial health during the STB’s review of the ultimate combination of CN and KCS
- The confidence CN and KCS have in the strength of their case is supported by the views of industry experts
- The proposed combination will establish seamless, single-line service from Canada, through the United States and into Mexico
- CN (CNR) is up 1.76 percent and is trading at C$132.15 at 12:28 pm ET
CN (CNR) and Kansas City Southern yesterday made a joint submission to the Surface Transportation Board.
The submission explains why the STB should approve CN’s voting trust structure, which is a critical step toward full STB review on the merits of the proposed CN-KCS combination.
This submission closes the record on the voting trust for the CN-KCS combination.
Over 1,750 letters of support have been filed with the STB, including more than 1,000 specifically requesting approval of the proposed voting trust, which is an important component of the CN-KCS combination.
The voting trust prevents unlawful and premature control of KCS, allows KCS to maintain independence and protects KCS’ financial health during the STB’s review of the ultimate combination of CN and KCS – all while CN remains financially strong.
The confidence CN and KCS have in the strength of their case is supported by the views of industry experts.
Former STB Commissioner and Vice-Chairman William Clyburn, Jr. wrote in a Railway Age op-ed dated June 10 that he believes the CN voting trust addresses “unlawful control” and the “public interest” standard under the new rules and that the voting trust should be approved.
The proposed combination will establish seamless, single-line service from Canada, through the United States and into Mexico.
The end-to-end CN-KCS combination will expand North American trade and power economic prosperity, provide numerous new connections and service options for customers, and deliver many compelling and innovative benefits for ports, employees and communities.
“It will also provide significant environmental benefits for North American communities. We are confident that our voting trust meets all the standards set forth by the STB and believe that, after a fair and thorough review by the STB, it should be approved,” said JJ Ruest, president and chief executive officer of CN
“It is important that the STB approve CN’s voting trust so that the STB can receive the formal merger application and proceed with a full substantive review of the many compelling and innovative pro-competitive benefits this combination will provide for the public,” added Patrick J. Ottensmeyer, president and chief executive officer of KCS
While KCS is in the voting trust, KCS will be managed day-to-day by KCS’ existing management team and board, overseen by an independent trustee with extensive knowledge of KCS. It will retain both full independence and the ability to increase capital investments beyond its planned capital program.
Under the voting trust, the STB has oversight over any divestiture of KCS, if necessary, and CN has committed to the STB that if it is required to divest KCS out of trust, it would instruct the trustee to divest KCS in a way that maintains KCS as an intact entity.
CN is a world-class transportation leader and trade enabler. Essential to the economy, to the customers, and to the communities it serves, CN safely transports more than 300 million tons of natural resources, manufactured products, and finished goods throughout North America every year.
Headquartered in Kansas City, Mo., Kansas City Southern (KCS) (NYSE: KSU) is a transportation holding company that has railroad investments in the U.S., Mexico and Panama.
CN (CNR) is up 1.76 percent and is trading at C$132.15 at 12:28 pm ET.
