CN's proposed "three business day" period
for public comment is based on false premise
CALGARY, AB, May 18, 2021 /CNW/ - Today, Canadian Pacific
Railway Limited (TSX: CP) (NYSE: CP) filed the following letter
with the Surface Transportation Board in response to CN's proposed
three-business day comment period on voting trust:
The Honorable Cynthia T. Brown
Chief, Section of Administration, Office of Proceedings
Surface Transportation Board
395 E Street S.W.
Washington, DC 20423
Re: Finance Docket No. 36514,
Canadian National Ry. – Control – Kansas City
Southern
Dear Ms. Brown:
I am writing on behalf of the Canadian Pacific1 in
response to the "Motion to Adopt Procedural Schedule for Renewed
Motion for Approval of Voting Trust Agreement" (CN-15) filed by
Canadian National ("CN") this morning.
CN's proposed "three business day" period for public comment on
a "Renewed Motion" it has not yet prepared or filed is not
constructive,2 and is based on the false premise that
members of the public were under an obligation to respond yesterday
(i.e., were "only a few hours from the deadline to do so")
to CN's previous motion for voting trust approval. The Board
should not be cowed by CN's gamesmanship and aggressive
tactics.
CN is well aware that there was no filing deadline yesterday on
CN's now-denied "Motion for Approval." CN was not subject to
the 2001 merger rules until yesterday, despite its invitation to
have them applied to a CN/KCS transaction. By finding that
the KCS waiver from the 2001 rules does not apply to a CN/KCS
transaction, the Board's decision yesterday is what invoked the
requirement for formal approval of CN's proposed voting
trust. Under those regulations (and as noted in the Board's
decision, at 7), once the 2001 rules are applicable the next step
is for the Board to establish a "comment period." See
49 C.F.R. § 1180.4(b)(4)(iv). The Board has not established
any such comment period, and thus there cannot have been any
"deadline" for such comments, CN's Kafka-esque claims to the
contrary notwithstanding.
CN's proposal for a three-business day comment period is not
serious. CN has already had four weeks to prepare a
submission addressing the Board's public interest standard, but
instead chose to stand pat on its "misplaced" view of the governing
legal standards. CN now chooses to give itself four business
days to prepare a "Renewed Motion," which in fact will be an
entirely new motion that somehow "follow[s] the guidance that the
Board provided in the May 17
Decision." CN-15 at 3. But then it proposes that
interested parties have a mere three business days to
respond. This proposal is grotesquely unfair and inadequate
on its face (particularly as to the interested parties who may be
less fully immersed in this proceeding than counsel for CN and
CP).
CN is of course free to file its Renewed Motion whenever it
desires. If the Board wishes to decide in advance to
establish a comment period – before assessing whether CN's Renewed
Motion even presents a prima facie case supporting approval of a
voting trust under the 2001 rules – it should consider interested
parties at least 20 days to respond (cf. 49 C.F.R. §
1104.13(a) ("A party may file a reply or motion addressed to any
pleading within 20 days after the pleading is filed with the Board,
unless otherwise provided."), and certainly at a minimum 10
days. A period of this duration is appropriate given the
importance of this matter, the unknown content of CN's forthcoming
Renewed Motion, and the fact that many parties with an interest in
this matter have undoubtedly been awaiting the Board's
establishment of a schedule before investing the time and effort
necessary to prepare comments. CN has pointed to no
compelling exigency that requires a more expedited schedule; its
proposed Merger Agreement allows a nine-month period in which to
obtain "STB Voting Trust Approval." See Agreement,
Section 7.1.3
CP appreciates the Board's
attention to this matter.
Respectfully submitted,
David L. Meyer
Attorney for Canadian Pacific Railway
Limited
_________________________________
1 Canadian Pacific Railway Limited, Canadian Pacific Railway
Company, and their U.S. rail carrier subsidiaries Soo Line Railroad
Company, Central Maine & Quebec Railway US Inc., Dakota,
Minnesota & Eastern Railroad Corporation, and Delaware and
Hudson Railway Company, Inc. (collectively "Canadian Pacific" or
"CP").
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2 CN
proposes to file its motion at an unspecified time this coming
Friday, and require that any interested member of the public file a
response by next Wednesday, giving them Monday and Tuesday to
prepare that response, and a third business day to get it on
file.
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3 Section
7.1 provides that the Agreement may be terminated if closing
conditions – including the requirement to obtain "STB Voting Trust
Approval" (as set forth in Section 6.1(e)) – prevent a closing on
or before the "nine-month anniversary of date of this
Agreement."
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FORWARD-LOOKING STATEMENTS AND INFORMATION
This news release includes certain forward-looking statements
and forward looking information (collectively, FLI). FLI is
typically identified by words such as "anticipate", "expect",
"project", "estimate", "forecast", "plan", "intend", "target",
"believe", "likely" and similar words suggesting future outcomes or
statements regarding an outlook. All statements other than
statements of historical fact may be FLI.
Although we believe that the FLI is reasonable based on the
information available today and processes used to prepare it, such
statements are not guarantees of future performance and you are
cautioned against placing undue reliance on FLI. By its
nature, FLI involves a variety of assumptions, which are based
upon factors that may be difficult to predict and that may involve
known and unknown risks and uncertainties and other factors which
may cause actual results, levels of activity and achievements to
differ materially from those expressed or implied by these FLI,
including, but not limited to, the following: the timing and
completion of the transaction, including receipt of regulatory and
shareholder approvals and the satisfaction of other conditions
precedent; interloper risk; the realization of anticipated benefits
and synergies of the transaction and the timing thereof; the
success of integration plans; the focus of management time and
attention on the transaction and other disruptions arising from
the transaction; estimated future dividends; financial
strength and flexibility; debt and equity market conditions,
including the ability to access capital markets on favourable terms
or at all; cost of debt and equity capital; the pending share split
of CP's issued and outstanding common shares; potential
changes in the CP share price which may negatively impact the value
of consideration offered to KCS shareholders; the ability of
management of CP, its subsidiaries and affiliates to execute key
priorities, including those in connection with the transaction;
general Canadian, U.S., Mexican and global social, economic,
political, credit and business conditions; risks associated with
agricultural production such as weather conditions and insect
populations; the availability and price of energy commodities;
the effects of competition and pricing pressures, including
competition from other rail carriers, trucking companies and
maritime shippers in Canada, the
U.S. and Mexico; industry
capacity; shifts in market demand; changes in commodity prices;
uncertainty surrounding timing and volumes of commodities being
shipped; inflation; geopolitical instability; changes in laws,
regulations and government policies, including regulation of rates;
changes in taxes and tax rates; potential increases in maintenance
and operating costs; changes in fuel prices; disruption in fuel
supplies; uncertainties of investigations, proceedings or other
types of claims and litigation; compliance with environmental
regulations; labour disputes; changes in labour costs and labour
difficulties; risks and liabilities arising from derailments;
transportation of dangerous goods; timing of completion of capital
and maintenance projects; currency and interest rate fluctuations;
exchange rates; effects of changes in market conditions and
discount rates on the financial position of pension plans and
investments; trade restrictions or other changes to international
trade arrangements; the effects of current and future multinational
trade agreements on the level of trade among Canada, the U.S. and Mexico; climate change and the market and
regulatory responses to climate change; anticipated in-service
dates; success of hedging activities; operational performance
and reliability; customer, shareholder, regulatory and other
stakeholder approvals and support; regulatory and legislative
decisions and actions; the adverse impact of any termination or
revocation by the Mexican government of Kansas City Southern de
Mexico, S.A. de C.V.'s Concession;
public opinion; various events that could disrupt operations,
including severe weather, such as droughts, floods, avalanches and
earthquakes, and cybersecurity attacks, as well as security threats
and governmental response to them, and technological changes; acts
of terrorism, war or other acts of violence or crime or risk of
such activities; insurance coverage limitations; material adverse
changes in economic and industry conditions, including the
availability of short and long-term financing; and the pandemic
created by the outbreak of COVID-19 and resulting effects on
economic conditions, the demand environment for logistics
requirements and energy prices, restrictions imposed by public
health authorities or governments, fiscal and monetary policy
responses by governments and financial institutions, and
disruptions to global supply chains.
We caution that the foregoing list of factors is not exhaustive
and is made as of the date hereof. Additional information about
these and other assumptions, risks and uncertainties can be
found in reports and filings by CP and KCS with Canadian and U.S.
securities regulators, including any proxy statement, prospectus,
material change report, management information circular or
registration statement to be filed in connection with
the transaction. Due to the interdependencies and correlation
of these factors, as well as other factors, the impact of any one
assumption, risk or uncertainty on FLI cannot be determined with
certainty.
Except to the extent required by law, we assume no obligation to
publicly update or revise any FLI, whether as a result of new
information, future events or otherwise. All FLI in this webpage is
expressly qualified in its entirety by these cautionary
statements.
ABOUT CANADIAN PACIFIC
Canadian Pacific (TSX: CP) (NYSE: CP) is a transcontinental
railway in Canada and the United States with direct links to major
ports on the west and east coasts. CP provides North American
customers a competitive rail service with access to key markets in
every corner of the globe. CP is growing with its customers,
offering a suite of freight transportation services, logistics
solutions and supply chain expertise. Visit www.cpr.ca to see the
rail advantages of CP. CP-IR
ADDITIONAL INFORMATION ABOUT THE TRANSACTION AND WHERE
TO FIND IT
CP will file with the U.S. Securities and Exchange Commission
(SEC) a registration statement on Form F-4, which will include a
proxy statement of KCS that also constitutes a prospectus of CP,
and any other documents in connection with the transaction. The
definitive proxy statement/prospectus will be sent to the
shareholders of KCS. CP will also file a management proxy circular
in connection with the transaction with applicable securities
regulators in Canada and the
management proxy circular will be sent to CP shareholders.
INVESTORS AND SHAREHOLDERS OF KCS AND CP ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND MANAGEMENT PROXY CIRCULAR, AS
APPLICABLE, AND ANY OTHER DOCUMENTS FILED OR TO BE FILED WITH THE
SEC OR APPLICABLE SECURITIES REGULATORS IN CANADA IN CONNECTION WITH THE TRANSACTION
WHEN THEY BECOME AVAILABLE, AS THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT KCS, CP, THE TRANSACTION AND RELATED MATTERS. The
registration statement and proxy statement/prospectus and other
documents filed by CP and KCS with the SEC, when filed, will
be available free of charge at the SEC's website at www.sec.gov. In
addition, investors and shareholders will be able to obtain free
copies of the registration statement, proxy statement/prospectus,
management proxy circular and other documents which will be filed
with the SEC and applicable securities regulators in Canada by CP online at investor.cpr.ca and
www.sedar.com, upon written request delivered to CP at 7550 Ogden
Dale Road S.E., Calgary, Alberta,
T2C 4X9, Attention: Office of the Corporate Secretary, or by
calling CP at 1-403-319-7000, and will be able to obtain free
copies of the proxy statement/prospectus and other documents filed
with the SEC by KCS online at www.investors.kcsouthern.com, upon
written request delivered to KCS at 427 West 12th Street,
Kansas City, Missouri 64105,
Attention: Corporate Secretary, or by calling KCS's Corporate
Secretary's Office by telephone at 1-888-800-3690 or by email at
corpsec@kcsouthern.com.
You may also read and copy any reports, statements and
other information filed by KCS and CP with the SEC at the SEC
public reference room at 100 F Street N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at
1-800-732-0330 or visit the SEC's website for further information
on its public reference room. This communication shall not
constitute an offer to sell or the solicitation of an offer to buy
any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to appropriate registration or qualification under
the securities laws of such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the U.S. Securities Act of
1933, as amended.
PARTICIPANTS IN THE SOLICITATION OF PROXIES
This communication is not a solicitation of proxies in
connection with the transaction. However, under SEC rules, CP, KCS,
and certain of their respective directors and executive officers
may be deemed to be participants in the solicitation of proxies in
connection with the transaction. Information about CP's directors
and executive officers may be found in its 2021 Management Proxy
Circular, dated March 10, 2021, as
well as its 2020 Annual Report on Form 10-K filed with the SEC and
applicable securities regulators in Canada on February 18,
2021, available on its website at investor.cpr.ca and at
www.sedar.com and www.sec.gov. Information about KCS's directors
and executive officers may be found on its website at
www.kcsouthern.com and in its 2020 Annual Report on Form 10-K filed
with the SEC on January 29, 2021,
available at www.sec.gov and www.investors.kcsouthern.com. These
documents can be obtained free of charge from the sources indicated
above. Additional information regarding the interests of such
potential participants in the solicitation of proxies in connection
with the transaction will be included in the proxy
statement/prospectus and management proxy circular and other
relevant materials filed with the SEC and applicable securities
regulators in Canada when they
become available.
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SOURCE Canadian Pacific Railway