CN and KCS emphasize compelling case for pro-competitive combination in STB filing, now awaiting final ruling on voting trust

CN and Kansas City Southern (“KCS”) yesterday made a joint submission to the Surface Transportation Board (“STB”) that 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, and we await the STB’s decision.

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 as such, 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.

“We are excited about this combination because of its potential to promote competition, growth and more choice for rail customers, port operators, employees, stakeholders 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.” - JJ Ruest, president and chief executive officer of CN

“CN is the ideal partner for KCS to power the resurgence of North America’s industrial and agricultural corridors and enhance competition. 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.” - Patrick J. Ottensmeyer, president and chief executive officer of KCS