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Filed pursuant to
General instruction
II.K. of Form F-9;
File No. 333-133703 |
PROSPECTUS SUPPLEMENT
September 19, 2007
(To Prospectus Dated May 9, 2006)
US$550,000,000
Canadian National Railway Company
US$250,000,000 5.850% Notes due 2017
US$300,000,000 6.375% Debentures due 2037
Interest on the 5.850% Notes due 2017
(the Notes) and the 6.375% Debentures due 2037
(the Debentures and, together with the Notes,
the Offered Securities) is payable semi-annually on
May 15 and November 15 of each year, commencing on
May 15, 2008. The Offered Securities are redeemable in
whole or in part at the option of Canadian National Railway
Company at any time and from time to time, upon not less than 30
nor more than 60 days notice, at the redemption
prices and subject to the conditions set forth herein. See
Description of Offered Securities Optional
Redemption.
The Offered Securities will be senior unsecured, general
obligations of the Company and will rank equally with all of the
Companys existing and future senior unsecured
indebtedness, but will be effectively junior to obligations of
the Companys subsidiaries. See Description of
Offered Securities General.
This offering is made by a Canadian issuer that is permitted,
under a multijurisdictional disclosure system adopted by the
United States, to prepare this prospectus supplement and the
accompanying prospectus in accordance with the disclosure
requirements of all the provinces and territories of Canada.
Prospective investors in the United States should be aware that
such requirements are different from those of the United
States.
Prospective investors should be aware that the acquisition of
the Offered Securities described herein may have tax
consequences both in the United States and in Canada. Such
consequences for investors who are resident in, or citizens of,
the United States may not be fully described herein.
The enforcement by investors of civil liabilities under
United States federal securities laws may be affected adversely
by the fact that the Company is a Canadian corporation, that
some or all of its officers and directors are residents of
Canada, that some of the underwriters or experts named in the
registration statement are residents of Canada and that a
substantial portion of the assets of the Company and said
persons may be located outside the United States.
These securities have not been approved or disapproved by the
U.S. Securities and Exchange Commission or any U.S. state
securities commission nor has the U.S. Securities and Exchange
Commission or any U.S. state securities commission passed upon
the accuracy or adequacy of this prospectus supplement or the
accompanying prospectus. Any representation to the contrary is a
criminal offense.
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Per Note | |
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Total | |
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Per Debenture | |
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Total | |
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Public offering price
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99.683 |
% |
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US$ |
249,207,500 |
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99.743 |
% |
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US$ |
299,229,000 |
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Underwriting commission
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0.650 |
% |
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US$ |
1,625,000 |
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0.875 |
% |
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US$ |
2,625,000 |
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Proceeds to CN (before
expenses)(1)
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99.033 |
% |
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US$ |
247,582,500 |
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98.868 |
% |
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US$ |
296,604,000 |
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(1) |
Plus accrued interest, if any, from September 24, 2007, if
settlement occurs after that date. |
The underwriters are offering the Offered Securities subject to
various conditions. The underwriters expect to deliver the
Offered Securities to purchasers in book-entry form only through
the facilities of The Depository Trust Company on or about
September 24, 2007.
There is no established trading market through which the
Offered Securities may be sold and investors may not be able to
resell the Offered Securities purchased under this prospectus
supplement and the accompanying prospectus.
In connection with the offering of the Offered Securities, the
underwriters may engage in transactions that stabilize, maintain
or otherwise affect the price of the Offered Securities. Such
transactions, if commenced, may be discontinued at any time. See
Underwriting.
Most of the underwriters are subsidiaries of banks which are
members of a syndicate of financial institutions that has made
credit facilities available to the Company and to which the
Company is currently indebted. Accordingly, under applicable
securities laws, the Company may be considered a connected
issuer of such underwriters. See
Underwriting.
Joint Book-Running Managers
Co-Managers
Banc of
America Securities LLC
You should rely only on the information contained in or
incorporated by reference in this prospectus supplement and the
accompanying prospectus. We have not, and the underwriters have
not, authorized anyone to provide you with different
information. We are not, and the underwriters are not, making an
offer of these Offered Securities in any jurisdiction where the
offer is not permitted. You should not assume that the
information contained in or incorporated by reference in this
prospectus supplement or the accompanying prospectus is accurate
as of any date other than the respective dates on the front of
this prospectus supplement.
TABLE OF CONTENTS
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Page | |
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Prospectus Supplement |
Documents Incorporated By Reference
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S-3 |
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Use Of Proceeds
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S-3 |
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Capitalization
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S-4 |
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Earnings Coverages
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S-4 |
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Description Of Offered Securities
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S-4 |
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Credit Ratings
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S-11 |
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Certain U.S. Federal Income Tax Considerations
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S-11 |
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Certain Canadian Income Tax Considerations
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S-12 |
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Underwriting
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S-13 |
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Legal Matters
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S-14 |
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Prospectus
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Page | |
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Documents Incorporated by Reference
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2 |
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Available Information
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2 |
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Statement Regarding Forward Looking Information
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3 |
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The Company
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3 |
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Use of Proceeds
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3 |
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Capitalization
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4 |
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Earnings Coverages
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4 |
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Description of Securities
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4 |
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Plan of Distribution
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8 |
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Risk Factors
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8 |
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Taxation
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8 |
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Legal Matters
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8 |
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Independent Auditors
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9 |
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Enforceability of Civil Liabilities Under the U.S. Federal
Securities Laws
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9 |
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Documents Filed as Part of the Registration Statement
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9 |
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Statutory Rights
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Consent of Independent Registered Public Accounting Firm
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10 |
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Certificate of the Company
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11 |
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In this prospectus supplement, unless the context otherwise
indicates, the Company, CN,
we, us and our each refer to
Canadian National Railway Company and its subsidiaries. All
dollar amounts referred to in this prospectus supplement are in
Canadian dollars unless otherwise specifically expressed.
S-2
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, filed with the securities commission or
other similar authority in each of the provinces and territories
of Canada, are incorporated by reference in, and form an
integral part of, this prospectus supplement and the
accompanying prospectus:
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(1) |
the Annual Information Form of the Company dated
February 12, 2007 for the year ended December 31, 2006; |
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(2) |
the audited consolidated financial statements of the Company for
the years ended December 31, 2006 and 2005 and notes
related thereto, together with the Report of Independent
Registered Public Accounting Firm thereon, prepared in
accordance with U.S. generally accepted accounting principles
(GAAP), as contained in the Companys 2006
Annual Report; |
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(3) |
the Companys Managements Discussion and Analysis
contained in the Companys 2006 Annual Report; |
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(4) |
the Companys Management Information Circular dated
March 6, 2007 prepared in connection with the
Companys annual meeting of shareholders held on
April 24, 2007; |
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(5) |
the unaudited interim consolidated financial statements of the
Company for the three months and six months ended June 30,
2007 and notes related thereto prepared in accordance with U.S.
GAAP, including the Companys Managements Discussion
and Analysis related thereto; and |
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(6) |
the material change report of the Company dated July 23,
2007 relating to the implementation of the Companys normal
course issuer bid. |
Any document of the type referred to in the preceding paragraph
and any material change reports (excluding confidential material
change reports) filed by the Company with securities commissions
or similar authorities in the provinces and territories of
Canada subsequent to the date of this prospectus supplement and
prior to the termination of any offering under this prospectus
supplement shall be deemed to be incorporated by reference into
this prospectus supplement and the accompanying prospectus.
Any statement contained in this prospectus supplement or the
accompanying prospectus or in a document incorporated or deemed
to be incorporated by reference in this prospectus supplement or
the accompanying prospectus shall be deemed to be modified or
superseded, for purposes of this prospectus supplement and the
accompanying prospectus, to the extent that a statement
contained in this prospectus supplement or the accompanying
prospectus or in any other subsequently filed document that also
is, or is deemed to be, incorporated by reference in this
prospectus supplement or the accompanying prospectus modifies or
supersedes such statement. The modifying or superseding
statement need not state that it has modified or superseded a
prior statement or include any other information set forth in
the document that it modifies or supersedes. The making of a
modifying or superseding statement shall not be deemed an
admission for any purposes that the modified or superseded
statement, when made, constituted a misrepresentation, an untrue
statement of a material fact or an omission to state a material
fact that is required to be stated or that is necessary to make
a statement not misleading in light of the circumstances in
which it was made. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to
constitute a part of this prospectus supplement or the
accompanying prospectus.
Copies of the documents incorporated herein by reference may be
obtained on request without charge from the Corporate Secretary,
Canadian National Railway Company, 935 de La Gauchetière
Street West, Montreal, Québec, H3B 2M9 (telephone:
(514) 399-7091),
and are also available electronically at www.sedar.com.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Offered
Securities will be approximately US$544 million after
deducting underwriting commissions and other expenses related to
the offering. The Company plans to use such proceeds to repay a
portion of its outstanding commercial paper and to reduce a
portion of its accounts receivable securitization program
(collectively, the Repayments). The indebtedness
being repaid was incurred by the Company for general corporate
purposes, including for the financing of the Companys
share repurchase program.
S-3
CAPITALIZATION
The following table sets forth the capitalization of the Company
as of December 31, 2006 and June 30, 2007 and the
latter as adjusted to give effect to the issuance of the Offered
Securities and the Repayments.
This table should be read in conjunction with our audited
consolidated financial statements for the year ended
December 31, 2006 and the related notes thereto and our
unaudited interim consolidated financial statements for the
three months and six months ended June 30, 2007 and the
related notes thereto incorporated by reference in this
prospectus supplement.
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As Adjusted | |
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June 30, 2007 | |
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June 30, 2007 | |
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December 31, 2006 | |
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(Audited) | |
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(Unaudited) | |
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(In millions) | |
Current portion of long-term debt
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$ |
366 |
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$ |
366 |
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$ |
218 |
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Long-term debt
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5,193 |
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4,873 |
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5,386 |
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Offered
Securities(1)
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586 |
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Total debt
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5,559 |
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5,825 |
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5,604 |
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Shareholders equity
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Common shares
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4,417 |
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4,417 |
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4,459 |
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Accumulated other comprehensive loss
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(180 |
) |
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(180 |
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(44 |
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Retained earnings
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5,554 |
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5,553 |
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5,409 |
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Total shareholders equity
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9,791 |
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9,790 |
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9,824 |
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Total capitalization
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$ |
15,350 |
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$ |
15,615 |
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$ |
15,428 |
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(1) |
Converted into Canadian dollars using the following exchange
rate: US$1.00 = Cdn.$1.0654. |
EARNINGS COVERAGES
The following consolidated financial ratios are calculated for
the twelve-month periods ended December 31, 2006 and
June 30, 2007 and give effect to the issuance of all
long-term debt of the Company and repayment or redemption
thereof as of such dates and are adjusted to give effect to the
issuance of the Offered Securities and the Repayments.
The Companys interest expense requirements would have
amounted to approximately $330 million and
$353 million for the twelve-month periods ended
December 31, 2006 and June 30, 2007, respectively. The
Companys earnings before interest expense and income taxes
for the twelve-month periods ended December 31, 2006 and
June 30, 2007 would have been approximately
$3,058 million and $3,011 million, respectively, which
is 9.27 times and 8.53 times the Companys
interest expense requirements for these periods.
DESCRIPTION OF OFFERED SECURITIES
Reference should be made to the accompanying prospectus for a
more detailed summary of certain provisions of the Offered
Securities. The description of the Offered Securities in this
prospectus supplement supplements the description of the
Companys securities contained in the accompanying
prospectus. If the descriptions contained in these documents are
inconsistent, the description contained in this prospectus
supplement controls. Capitalized terms used but not defined
herein have the meanings given to them in the accompanying
prospectus.
Unless otherwise indicated, references to CN or the
Company in this description of the Offered
Securities are to Canadian National Railway Company but not to
any of its subsidiaries.
General
The Offered Securities will be issued in fully registered form
in denominations of US$1,000 and integral multiples thereof
under an indenture dated as of June 1, 1998 (the U.S.
Indenture) between the Company and The Bank of New York,
as trustee (the U.S. Trustee). The aggregate
principal amount of the Notes will be initially limited to
US$250,000,000, and the aggregate principal amount of the
Debentures will be initially limited to US$300,000,000. The U.S.
Indenture does not limit the amount of debt securities that may
be issued by the Company. The Offered Securities will be senior
unsecured, general obligations of the Company and will rank
equally with all of the Companys existing and future
senior unsecured debt.
S-4
The Company conducts a substantial portion of its operations
through its subsidiaries. Claims of creditors of the
Companys subsidiaries generally have priority with respect
to the assets and earnings of those subsidiaries over the claims
of creditors of the Company, including holders of the Offered
Securities. The Offered Securities therefore are effectively
subordinated to creditors of the Companys subsidiaries.
The Offered Securities are also subordinated to any liabilities
of the Company that are secured by any of the Companys
assets including, without limitation, those under capital leases.
The Company and its subsidiaries may incur additional
obligations in the future.
The Notes and the Debentures will mature on November 15,
2017 and November 15, 2037, respectively, but are subject
to earlier optional redemption as described under
Optional Redemption below. The Offered
Securities are not entitled to the benefit of any sinking fund.
Interest will accrue on the principal amount of each Note and
Debenture at annual rates of 5.850% and 6.375%, respectively,
from and including September 24, 2007 (the Original
Issue Date) to but excluding the date on which the
principal amount is paid in full. Interest accrued on each Note
and Debenture will be payable semi-annually in arrears on
May 15 and November 15 of each year, commencing on
May 15, 2008, to the holder of record of such Offered
Security on the May 1 or November 1 preceding the next
interest payment date.
If any interest, principal or other payment to be made in
respect of the Offered Securities would otherwise be due on a
day that is not a Business Day, payment may be made on the next
succeeding day that is a Business Day, with the same effect as
if payment were made on the due date. Business Day
means any day other than a Saturday, a Sunday or a day on which
banking institutions in New York City are authorized or
obligated by law to close.
Transfers of the Offered Securities are registrable and
principal is payable at the corporate trust office of the U.S.
Trustee at 101 Barclay Street, Floor 4E,
New York, New York 10286, Attention: Global
Trust Services. The Offered Securities will initially be
issued in global form. See Global
Securities below.
Optional Redemption
The Notes will be redeemable, in whole or in part, at the option
of the Company at any time and from time to time, upon not less
than 30 nor more than 60 days notice, at a redemption
price equal to the greater of (i) 100% of the principal
amount of the Notes to be redeemed and (ii) as determined
by an Independent Investment Banker, the sum of the present
values of the remaining scheduled payments of principal and
interest thereon (not including any portion of such payments of
interest accrued as of the date of redemption) discounted to the
redemption date on a
semi-annual basis
(assuming a 360-day
year consisting of twelve
30-day months) at the
Treasury Rate plus 25 basis points, plus, in either case,
accrued interest thereon to the date of redemption. Unless the
Company defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the
Notes or portions thereof called for redemption on such date.
The Debentures will be redeemable, in whole or in part, at the
option of the Company at any time and from time to time, upon
not less than 30 nor more than 60 days notice, at a
redemption price equal to the greater of (i) 100% of the
principal amount of the Debentures to be redeemed and
(ii) as determined by an Independent Investment Banker, the
sum of the present values of the remaining scheduled payments of
principal and interest thereon (not including any portion of
such payments of interest accrued as of the date of redemption)
discounted to the redemption date on a
semi-annual basis
(assuming a 360-day
year consisting of twelve
30-day months) at the
Treasury Rate plus 30 basis points, plus, in either case,
accrued interest thereon to the date of redemption. Unless the
Company defaults in payment of the redemption price, on and
after the redemption date, interest will cease to accrue on the
Debentures or portions thereof called for redemption on such
date.
Comparable Treasury Issue means, with respect to the
Notes or the Debentures, the United States Treasury security
selected by an Independent Investment Banker as having an actual
or interpolated maturity comparable to the remaining term of the
Notes or the Debentures, as the case may be, that would be
utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate
debt securities of comparable maturity to the remaining term of
the Notes or the Debentures, as the case may be.
Comparable Treasury Price means, with respect to any
redemption date, (i) the average of the Reference Treasury
Dealer Quotations for such redemption date, after excluding the
highest and lowest of such Reference Treasury Dealer Quotations
(if any), or (ii) if the U.S. Trustee obtains fewer than
five such Reference Treasury Dealer Quotations, the average of
all such quotations.
S-5
Independent Investment Banker means one of the
Reference Treasury Dealers appointed by the Company.
Reference Treasury Dealer means each of Citigroup
Global Markets Inc., J.P. Morgan Securities Inc. plus three
other securities dealers selected by the Company or their
affiliates which are primary U.S. Government securities dealers
and their respective successors; provided, however, that if any
of the foregoing or their affiliates shall cease to be a primary
U.S. Government securities dealer in New York City (a
Primary Treasury Dealer), the Company shall
substitute therefor another Primary Treasury Dealer.
Reference Treasury Dealer Quotations means, with
respect to each Reference Treasury Dealer and any redemption
date, the average, as determined by the Company, of the bid and
asked prices for the Comparable Treasury Issue (expressed in
each case as a percentage of its principal amount) quoted in
writing to the U.S. Trustee by such Reference Treasury Dealer at
3:30 P.M. (New York City time) on the third business
day preceding such redemption date.
Treasury Rate means, with respect to any redemption
date with respect to the applicable Offered Securities, the rate
per annum equal to the semi-annual equivalent yield to maturity
of, or interpolated (on a day count basis) from, the Comparable
Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal
to the Comparable Treasury Price for such redemption date.
Change of Control Repurchase Event
If a change of control repurchase event occurs with respect to
either or both the Notes or Debentures, unless we have exercised
our right to redeem the Notes or Debentures as described above,
we will be required to make an offer to each holder of either or
both the Notes or Debentures, as the case may be, to repurchase
all or any part (in integral multiples of US$1,000) of that
holders Notes or Debentures, as the case may be, at a
repurchase price in cash equal to 101% of the aggregate
principal amount of such securities repurchased plus any accrued
and unpaid interest on the securities repurchased to, but not
including, the date of repurchase. Within 30 days following
a change of control repurchase event or, at our option, prior to
a change of control, but after the public announcement of the
change of control, we will mail a notice to each holder, with a
copy to the U.S. Trustee, describing the transaction or
transactions that constitute or may constitute the change of
control repurchase event and offering to repurchase securities
on the payment date specified in the notice, which date will be
no earlier than 30 days and no later than 60 days from
the date such notice is mailed. The notice shall, if mailed
prior to the date of consummation of the change of control,
state that the offer to purchase is conditioned on a change of
control repurchase event occurring on or prior to the payment
date specified in the notice. The Company will comply with the
requirements of
Rule 14e-1 under
the U.S. Securities Exchange Act of 1934, as amended, and any
other securities laws and regulations thereunder to the extent
those laws and regulations are applicable in connection with the
repurchase of the securities as a result of a change of control
repurchase event. To the extent that the provisions of any
securities laws or regulations conflict with the change of
control repurchase event provisions of the securities, the
Company will comply with the applicable securities laws and
regulations and will not be deemed to have breached its
obligations under the change of control repurchase event
provisions of the securities by virtue of such conflict.
On the repurchase date following a change of control repurchase
event, the Company will, to the extent lawful:
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(1) |
accept for payment all Notes or portions of Notes and all
Debentures or portions of Debentures, as applicable, properly
tendered pursuant to its offer; |
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(2) |
deposit with the U.S. Trustee an amount equal to the aggregate
purchase price in respect of all Notes or portions of Notes and
all Debentures or portions of Debentures, as applicable,
properly tendered; and |
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(3) |
deliver or cause to be delivered to the U.S. Trustee the
securities properly accepted, together with an officers
certificate stating the aggregate principal amount of securities
being purchased by the Company. |
The U.S. Trustee will promptly deliver by wire transfer to each
holder of securities properly tendered the purchase price for
the securities, and the U.S. Trustee will promptly authenticate
and mail (or cause to be transferred by book-entry) to each
holder a new note or debenture, as applicable, equal in
principal amount to any unpurchased portion of any securities
surrendered; provided that each new note or debenture, as
applicable, will be in a principal amount of an integral
multiple of US$1,000.
The Company will not be required to make an offer to repurchase
the Notes or Debentures, as applicable, upon a change of control
repurchase event if a third party makes such an offer in the
manner, at the times and otherwise in
S-6
compliance with the requirements for an offer made by the
Company and such third party purchases all Notes or Debentures,
as applicable, properly tendered and not withdrawn under its
offer.
For purposes of the foregoing discussion of a repurchase at the
option of holders, the following definitions are applicable:
below investment grade ratings event means,
with respect to the Notes or Debentures, as the case may be, on
any day within the
60-day period (which
period shall be extended so long as the rating of the Notes or
Debentures, as the case may be, is under publicly announced
consideration for a possible downgrade by any of the rating
agencies) after the earlier of (1) the occurrence of a
change of control; or (2) public notice of the occurrence
of a change of control or the intention by the Company to effect
a change of control, the Notes or Debentures, as the case may
be, are rated below investment grade by at least two of three
rating agencies if there are three rating agencies, or all of
the rating agencies if there are less than three rating
agencies. Notwithstanding the foregoing, a below investment
grade ratings event otherwise arising by virtue of a particular
reduction in rating shall not be deemed to have occurred in
respect of a particular change of control (and thus shall not be
deemed a below investment grade ratings event for purposes of
the definition of change of control repurchase event hereunder)
if the rating agencies making the reduction in rating to which
this definition would otherwise apply do not announce or
publicly confirm or inform the U.S. Trustee in writing at its
request that the reduction was the result, in whole or in part,
of any event or circumstance comprised of or arising as a result
of, or in respect of, the applicable change of control (whether
or not the applicable change of control shall have occurred at
the time of the ratings event).
change of control means the consummation of
any transaction (including, without limitation, any merger or
consolidation) the result of which is that any
person or group (as those terms are used
in Section 13(d)(3) of the Exchange Act), other than the
Company or its subsidiaries, becomes the beneficial owner (as
defined in
Rules 13d-3 and
13d-5 under the
Exchange Act), directly or indirectly, of more than 50% of the
combined voting power of the Companys voting stock or
other voting stock into which the Companys voting stock is
reclassified, consolidated, exchanged or changed measured by
voting power rather than number of shares.
change of control repurchase event means the
occurrence of both a change of control and a below investment
grade ratings event with respect to the Notes or the Debentures,
as the case may be.
DBRS means Dominion Bond Rating Service
Limited.
investment grade means a rating of Baa3 or
better by Moodys (or its equivalent under any successor
rating categories of Moodys); a rating of BBB- or better
by S&P (or its equivalent under any successor rating
categories of S&P); a rating of BBB(low) or better by DBRS
(or its equivalent under any successor rating categories of
DBRS); and the equivalent investment grade credit rating from
any additional rating agency or rating agencies selected by the
Company.
Moodys means Moodys Investors
Services, Inc.
rating agency means (1) each of
Moodys, DBRS and S&P; and (2) if any of
Moodys, DBRS or S&P ceases to rate the securities or
fails to make a rating of the securities publicly available for
reasons outside of the Companys control, a
nationally recognized statistical rating
organization within the meaning of
Rule 15c3-1(c)(2)(vi)(F)
under the Exchange Act, selected by the Company (as certified by
the Companys Chief Executive Officer or Chief Financial
Officer) as a replacement agency for Moodys, DBRS or
S&P, or all of them, as the case may be.
S&P means Standard & Poors
Ratings Services, a division of McGraw-Hill, Inc.
voting stock of any specified
person (as that term is used in
Section 13(d)(3) of the Exchange Act as of any date means
the capital stock of such person that is at the time entitled to
vote generally in the election of the board of directors of such
person.
The change of control repurchase event feature of the Notes and
Debentures may in certain circumstances make more difficult or
discourage a sale or takeover of the Company and, thus, the
removal of incumbent management. The Company could, in the
future, enter into certain transactions, including asset sales,
acquisitions, refinancings or other recapitalizations, that
would not constitute a change of control repurchase event under
the Notes or Debentures, but that could increase the amount of
indebtedness outstanding at such time or otherwise affect the
Companys capital structure or credit ratings on the Notes
and Debentures.
The Company may not have sufficient funds to repurchase all the
Notes or Debentures upon a change of control repurchase event.
S-7
Further Issues
The Company may from time to time, without notice to or the
consent of any registered holders, create and issue further
notes ranking equally and ratably with the Notes, or further
debentures ranking equally and ratably with the Debentures.
Those further notes or debentures will be consolidated and form
a single series with the Notes or Debentures, as the case may
be, and will have the same terms as to status, redemption or
otherwise.
U.S. Indenture
Modification
The U.S. Indenture permits the Company and the U.S. Trustee,
with the consent of the holders of not less than
662/3%
in principal amount of each series of Outstanding Securities (as
defined in the U.S. Indenture) issued pursuant to the U.S.
Indenture (including the Notes and the Debentures) affected by
the modifications and at the time outstanding, to modify the
U.S. Indenture or any supplemental indenture or the rights of
the holders of such series, except that no such modification
shall without the consent of the holders of all such Outstanding
Securities so affected (i) extend the fixed maturity of any
Outstanding Security issued pursuant to the U.S. Indenture,
reduce the principal amount thereof or reduce the rate or extend
the time of payment of interest thereon, or reduce any
redemption premium thereon, or (ii) reduce the aforesaid
percentage of Outstanding Securities necessary to modify the
U.S. Indenture or any supplemental indenture.
The U.S. Indenture also permits the Company and the U.S.
Trustee, without the consent of holders of Securities (as
defined in the U.S. Indenture) of any series (including the
Notes and the Debentures), to enter into indentures supplemental
to the U.S. Indenture for certain purposes, including
(i) to change or eliminate any of the provisions of the
U.S. Indenture, provided that any such change or elimination
(A) shall neither (1) apply to any Security of any
series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision nor
(2) modify the rights of the holders of any such Security
with respect to such provision or (B) shall become
effective only when there is no such Security outstanding or
(ii) to cure any ambiguity or to correct or supplement any
provision contained in the U.S. Indenture or in any supplemental
indenture which may be defective or inconsistent with any other
provision contained in the U.S. Indenture or in any supplemental
indenture, or to make such other provisions in regard to matters
or questions arising under the U.S. Indenture as shall not
adversely affect the interests of holders of Securities of any
series issued pursuant to the U.S. Indenture.
Events
of Default
An event of default (an Event of Default) with
respect to any series of Securities issued pursuant to the U.S.
Indenture is defined in the U.S. Indenture as being: default for
30 days in payment of interest on that series; default in
payment of principal (or premium, if any); default in the
deposit of any mandatory sinking fund payment on that series;
default by the Company in the performance of any of the other
covenants or warranties in the U.S. Indenture relating to that
series which shall not have been remedied within a period of
60 days after notice by the U.S. Trustee or holders of at
least 25% in aggregate principal amount of the Securities of
that series then outstanding; default by the Company under any
mortgage, indenture or instrument evidencing or under which
there may be issued indebtedness for money borrowed
(i) which constitutes a failure to pay when due, after the
expiration of any applicable grace period, principal in an
amount in excess of US$75 million or (ii) which
results in such indebtedness in an amount in excess of
US$75 million becoming due and payable prior to the date on
which it would otherwise become due and payable, and such
indebtedness has not been discharged or such acceleration is not
rescinded or annulled within a period of 30 days after
written notice by the U.S. Trustee or holders of at least 25% in
aggregate principal amount of the Securities of that series then
outstanding; or certain events of bankruptcy, insolvency or
reorganization of the Company. The U.S. Indenture provides that
the U.S. Trustee shall, with certain exceptions, notify the
holders of Securities of each series issued pursuant to the U.S.
Indenture of Events of Default known to it and affecting that
series within 90 days after occurrence. The U.S. Trustee is
protected if it withholds notice of any default (except in the
payment of principal of or interest or premium, if any, on any
series of Securities issued pursuant to the U.S. Indenture or
the making of any mandatory sinking fund payment) to the holders
so affected if the U.S. Trustee considers it in the interest of
such holders to do so.
The U.S. Indenture provides that if an Event of Default with
respect to any series of Securities issued pursuant to the U.S.
Indenture shall have occurred and be continuing, either the U.S.
Trustee or the holders of at least 25% in aggregate principal
amount of Securities of that series then outstanding may declare
the principal of all the Securities of
S-8
that series to be due and payable immediately, but upon certain
conditions such declaration may be annulled and past defaults
(except, unless theretofore cured, a default in payment of
principal of or interest or premium, if any, on that series of
Securities) may be waived by the holders of a majority in
principal amount of the Securities of that series then
outstanding.
Subject to the provisions of the U.S. Indenture relating to the
duties of the U.S. Trustee, in case an Event of Default with
respect to any series of Securities issued pursuant to the U.S.
Indenture shall occur and be continuing, the U.S. Trustee shall
be under no obligation to exercise any of the rights or powers
in the U.S. Indenture at the request or direction of any of the
holders of such series, unless such holders shall have offered
to the U.S. Trustee reasonable security or indemnity. Subject to
such provisions for indemnification and certain limitations
contained in the U.S. Indenture, the holders of a majority in
principal amount of the Securities of each series issued
pursuant to the U.S. Indenture affected by an Event of Default
and then outstanding shall have the right to direct the time,
method and place of conducting any proceeding for any remedy
available to the U.S. Trustee under the U.S. Indenture. The U.S.
Indenture requires the annual filing by the Company with the
U.S. Trustee of a report as to compliance with certain covenants
contained in the U.S. Indenture.
Successor
Corporation
The U.S. Indenture provides that the Company may consolidate,
amalgamate or merge with or into any other corporation or sell,
convey or lease all or substantially all of its property to any
other corporation authorized to acquire and operate the same;
provided that upon any such consolidation, amalgamation, merger,
sale, conveyance or lease, (i) the successor entity (if
other than the Company) is organized under the law of a Canadian
or U.S. jurisdiction and (ii) the payment of the principal
of (and premium on, if any) and interest on all of the
Securities according to their terms, and the performance of all
the covenants and conditions of the U.S. Indenture to be
performed by the Company, shall be expressly assumed, by
supplemental indenture satisfactory in form to the U.S. Trustee,
by the corporation (if other than the Company) formed by such
consolidation or amalgamation, or into which the Company shall
have been merged, or by the corporation which shall have
acquired or leased such property.
Restriction
on Secured Debt
The Company has covenanted in the U.S. Indenture that if in the
future it, or any of its subsidiaries, shall secure any
indebtedness for money borrowed, or any guarantees of such
indebtedness, now or hereafter existing, by any mortgage,
pledge, hypothec, lien, security interest, privilege,
conditional sale or other title retention agreement or similar
encumbrance (a Mortgage) on any present or future
Railway Properties of the Company or any of its Canadian or U.S.
Subsidiaries or on shares of stock of any Railroad Subsidiary of
the Company, the Securities shall be secured by the Mortgage
equally and ratably with such other indebtedness or guarantee
thereby secured; provided, however, that the foregoing shall not
apply (i) to any Mortgage created on Railway Properties
acquired or constructed after the date of the U.S. Indenture,
within 90 days after the time of purchase or construction
and commencement of full operation thereof, whichever is later,
as security for the payment of any part of the purchase price or
construction cost of such Railway Properties, (ii) in
certain cases where the Company or any Subsidiary acquires
Railway Properties subject to a pre-existing Mortgage or
acquires a corporation with Railway Properties subject to such
pre-existing Mortgage or acquires, merges with or is
consolidated with a corporation whose shares or indebtedness are
subject to a pre-existing Mortgage, (iii) to any
conditional sales agreement or other title retention agreement
with respect to Railway Properties acquired after the date of
the U.S. Indenture or (iv) in certain cases, to refundings
or renewals of the foregoing or of any secured debt of the
Company or any of its Subsidiaries outstanding as of the date of
the U.S. Indenture. As used in such covenant, the term
Railway Properties means all main and branch lines
of railway located in Canada or the United States, including all
real property used as the right of way for such lines, and the
term Railroad Subsidiary means a Subsidiary whose
principal assets are Railway Properties. As used in the U.S.
Indenture, the term Subsidiary means a corporation
of which the majority of the outstanding voting shares is owned,
directly or indirectly, by the Company or by one or more
subsidiaries of the Company; provided that no corporation shall
become or shall be deemed to be a subsidiary of the Company for
purposes of the U.S. Indenture if, and so long as, the Company
does not control such entity by reason of any law, regulation,
executive order or other legal requirement, including, without
limitation, pursuant to any voting trust or similar arrangement
entered into in connection with the acquisition of such
corporation by the Company pending regulatory approval of such
acquisition.
S-9
Defeasance
The Company (a) will be discharged (legal
defeasance) from any and all obligations in respect of
Securities of any series issued pursuant to the U.S. Indenture
(except for certain obligations including the obligation to
register the transfer or exchange of Securities of such series,
to replace destroyed, lost or stolen Securities of such series,
to maintain paying agencies and to compensate and indemnify the
U.S. Trustee) or (b) need not comply (covenant
defeasance) with certain covenants including those
described above under Restriction on Secured
Debt, and certain Events of Default as specified in the
U.S. Indenture (such as those arising out of the failure to
comply with such covenants) will no longer constitute Events of
Default with respect to such series of Securities, in each case
upon the irrevocable deposit with the U.S. Trustee, in trust, of
money and/or securities of or guaranteed by the U.S. government
or any agency or instrumentality thereof (or certificates
evidencing an ownership interest therein) which, through the
payment of interest and principal in respect thereof in
accordance with their terms, will provide cash at such times and
in such amounts as will be sufficient to pay the principal of
(and premium on, if any) and the interest on the Securities of
such series at Stated Maturity (as defined in the U.S.
Indenture) or upon redemption in accordance with the terms of
the Securities of that series (the Defeasance
Trust). Such defeasances may be effected only if, among
other things, (i) the Company has delivered to the U.S.
Trustee an opinion of counsel to the effect that holders of the
Securities of such series will not recognize income, gain or
loss for United States federal or Canadian income tax purposes
as a result of such defeasance and will be subject to tax in the
same manner and at the same times as if such defeasance had not
occurred and, in the case of legal defeasance pursuant to clause
(a), indicating that a ruling to such effect has been received
from or published by the U.S. Internal Revenue Service or that
since the date of the U.S. Indenture there has been a change in
applicable U.S. federal income tax law to such effect and
(ii) the creation of the Defeasance Trust will not violate
the United States Investment Company Act of 1940, as amended.
Global
Securities
Upon original issuance, each series of the Offered Securities
will be represented by one or more global securities (the
Global Securities) having an aggregate principal
amount equal to that of the Offered Securities of such series
represented thereby. Each Global Security will be deposited
with, or on behalf of, The Depository Trust Company
(DTC), as depositary, and registered in the name of
Cede & Co. (or such other nominee as may be designated by
DTC), as nominee of DTC. The Global Securities will bear legends
regarding the restrictions on exchanges and registration of
transfer thereof referred to below and any other matters as may
be provided for by the U.S. Indenture.
DTC has advised the Company as follows: DTC is a limited purpose
trust company organized under the New York Banking Law, a
banking organization within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a
clearing corporation within the meaning of the New
York Uniform Commercial Code and a clearing agency
registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC was created to
hold securities of its participants (as defined below) and to
facilitate the clearance and settlement of securities
transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants,
thereby eliminating the need for physical movement of securities
certificates. DTCs participants include securities brokers
and dealers (including the underwriters), banks, trust
companies, clearing corporations and certain other
organizations, some of whom (and/or their representatives) own
DTC. Access to DTCs book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a
participant, either directly or indirectly (indirect
participants).
Notwithstanding any provision of the U.S. Indenture or the
Offered Securities described herein, no Global Security may be
exchanged in whole or in part for Offered Securities registered,
and no transfer of a Global Security in whole or in part may be
registered, in the name of any person other than DTC or any
nominee of DTC for such Global Security unless (i) DTC has
notified the Company that it is unwilling or unable to continue
as depositary for the Global Security or has ceased to be
qualified to act as such as required pursuant to the U.S.
Indenture or (ii) there shall have occurred and be
continuing an Event of Default with respect to the Offered
Securities represented by such Global Security.
All Offered Securities issued in exchange for a Global Security
or any portion thereof will be registered in such names as DTC
may direct.
As long as DTC, or its nominee, is the registered holder of a
Global Security, DTC or such nominee, as the case may be, will
be considered the sole owner and holder of such Global Security
and the Offered Securities represented thereby for all purposes
under the Offered Securities and the U.S. Indenture. Except in
the limited circumstances
S-10
referred to above, owners of beneficial interests in a Global
Security will not be entitled to have such Global Security or
any Offered Securities represented thereby registered in their
names, will not receive or be entitled to receive physical
delivery of certificated Offered Securities in exchange therefor
and will not be considered to be the owners or holders of such
Global Security or any Offered Securities represented thereby
for any purpose under the Offered Securities or the U.S.
Indenture. All payments of principal of and interest on a Global
Security will be made to DTC or its nominee, as the case may be,
as the holder thereof. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of
such securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a Global Security.
Ownership of beneficial interests in a Global Security will be
limited to institutions that have accounts with DTC or its
nominee (participants) and to persons that may hold
beneficial interests through participants or indirect
participants. In connection with the issuance of any Global
Security, DTC will credit, in its book-entry registration and
transfer system, the respective principal amounts of Offered
Securities represented by the Global Security to the accounts of
its participants. Ownership of beneficial interests in a Global
Security will be shown only on, and the transfer of those
ownership interests will be effected only through, records
maintained by DTCs participants and indirect participants.
Payments, transfers, exchanges, notices and other matters
relating to beneficial interests in a Global Security may be
subject to various policies and procedures adopted by DTC from
time to time. None of the Company or the U.S. Trustee or any of
their respective agents will have any responsibility or
liability for any aspect of DTCs or any participants
records relating to, or for payments or notices on account of,
beneficial interests in a Global Security, or for maintaining,
supervising or reviewing any records relating to such beneficial
interests.
Certain Notices
With respect to any Offered Securities represented by a Global
Security, notices to be given to the holders of the Offered
Securities will be deemed to have been fully and duly given to
the holders when given to DTC, or its nominee, in accordance
with DTCs policies and procedures. The Company believes
that DTCs practice is to inform its participants of any
such notice it receives, in accordance with its policies and
procedures. Persons who hold beneficial interests in the Offered
Securities through DTC or its direct or indirect participants
may wish to consult with them about the manner in which notices
and other communications relating to the Offered Securities may
be given and received through the facilities of DTC. Neither the
Company nor the U.S. Trustee will have any responsibility with
respect to those policies and procedures or for any notices or
other communications among DTC, its direct and indirect
participants and the beneficial owners of the Offered Securities
in global form.
With respect to any Offered Securities not represented by a
Global Security, notices to be given to the holders of the
Offered Securities will be deemed sufficient if mailed to the
holders within the period prescribed for the giving of such
notice.
Neither the failure to give any notice nor any defect in any
notice given to a particular holder will affect the sufficiency
of any notice given to another holder.
CREDIT RATINGS
The Companys senior unsecured indebtedness currently has a
rating of A- by
Standard & Poors, a division of The
McGraw-Hill Companies,
Inc. (S&P), A3 by Moodys Investors
Service, Inc. (Moodys) and A (low) by
Dominion Bond Rating Service Limited (DBRS). The
Company expects that the Offered Securities will be assigned the
same ratings by these rating agencies. An
A- rating by S&P
falls within the third highest of ten major rating categories.
An A3 rating by Moodys falls within the third highest of
nine major rating categories. An A (low) rating by DBRS
falls within the third highest of ten major rating categories.
Credit ratings are intended to provide investors with an
independent measure of the credit quality of an issue of
securities. Each rating should be evaluated independently of any
other rating. A security rating is not a recommendation to buy,
sell or hold securities and may be subject to revision or
withdrawal at any time by the rating agency issuing such rating.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following describes the material U.S. federal income tax
consequences of the ownership and disposition of the Offered
Securities to initial U.S. Holders (as defined below) purchasing
an Offered Security at its issue price. The
issue price of an Offered Security will equal the
first price to the public (not including bond houses, brokers or
S-11
similar persons or organizations acting in the capacity of
underwriters, placement agents or wholesalers) at which a
substantial amount of such series of Offered Securities is sold
for money. This summary is based on the U.S. Internal Revenue
Code of 1986, as amended (the Code), final,
temporary and proposed Treasury regulations, revenue rulings,
administrative pronouncements and judicial decisions, all as
currently in effect and all as of the date hereof, any of which
are subject to change, possibly on a retroactive basis.
Moreover, this summary applies only to initial purchasers who
hold Offered Securities as capital assets within the
meaning of Section 1221 of the Code and does not describe
all of the tax consequences that may be relevant to holders in
light of their special circumstances or to holders subject to
special rules, such as financial institutions, insurance
companies, regulated investment companies, real estate
investment trusts, partnerships or other entities classified as
partnerships for U.S. federal income tax purposes, dealers in
securities or foreign currencies, traders in securities or
commodities that elect to mark to market their positions,
persons holding Offered Securities as a hedge or integrated
transaction, tax-exempt
entities or U.S. Holders whose functional currency is not the
U.S. dollar.
As used herein, the term U.S. Holder means a
beneficial owner of an Offered Security that is, for U.S.
federal income tax purposes, (i) a citizen or resident of
the United States, (ii) a corporation, or other entity
taxable as a corporation for U.S. federal income tax purposes,
created or organized in or under the laws of the United States
or of any political subdivision thereof or (iii) an estate
or trust the income of which is subject to U.S. federal income
tax regardless of its source.
Interest on the Offered Securities. Interest accrued or
received in respect of an Offered Security generally will be
included in gross income as ordinary interest income at the time
the interest accrues or is received in accordance with your
usual method of accounting for U.S. federal income tax purposes.
Interest income earned with respect to a note will constitute
foreign-source income
for U.S. federal income tax purposes, which may be relevant in
calculating the foreign tax credit limitation. The rules
governing foreign tax credits are complex and, therefore, you
should consult your tax adviser regarding the availability of
foreign tax credits in your particular circumstances.
Sale, Exchange or Retirement of the Offered Securities.
Upon the sale, exchange or retirement of an Offered
Security, you generally will recognize gain or loss equal to the
difference between the amount realized (not including any
amounts attributable to accrued and unpaid interest, which will
be taxed as described above) and your tax basis in the Offered
Security. Your tax basis in an Offered Security generally will
be equal to the cost of the Offered Security. Gain or loss
generally will be U.S.-source income for purposes of computing
your foreign tax credit limitation. In addition, this gain or
loss generally will be capital gain or loss.
Long-term capital gain
of a non-corporate U.S.
Holder that is recognized before January 1, 2011 generally
is taxed at a maximum rate of 15%. The deductibility of capital
losses is subject to certain limitations.
Information Reporting and Backup Withholding
Information returns may be filed with the U.S. Internal Revenue
Service (the IRS) in connection with payments on the
Offered Securities and the proceeds from a sale or other
disposition of the Offered Securities. You may be subject to
U.S. backup withholding on these payments if you fail to provide
your taxpayer identification number and comply with certain
certification procedures or otherwise establish an exemption
from backup withholding. The amount of any backup withholding
will be allowed as a credit against your federal income tax
liability and may entitle you to a refund, provided that the
required information is furnished to the IRS.
CERTAIN CANADIAN INCOME TAX CONSIDERATIONS
The following is a summary of the principal Canadian federal
income tax considerations under the Income Tax Act (Canada) (the
Income Tax Act) generally applicable to the holders
of the Offered Securities sold pursuant to this prospectus
supplement who, for the purpose of the Income Tax Act, are not
resident or deemed to be resident in Canada, hold their Offered
Securities as capital property, deal at arms length with
the Company, do not use or hold and are not deemed to use or
hold the Offered Securities in carrying on business in Canada
and are not insurers that carry on an insurance business in
Canada and elsewhere (the
Non-Resident
Holders). THIS SUMMARY IS GENERAL IN NATURE AND IS
NOT EXHAUSTIVE OF ALL POSSIBLE CANADIAN TAX CONSEQUENCES.
ACCORDINGLY, PROSPECTIVE INVESTORS SHOULD CONSULT WITH THEIR OWN
TAX ADVISORS FOR ADVICE WITH RESPECT TO THEIR PARTICULAR
CIRCUMSTANCES, INCLUDING ANY CONSEQUENCES OF AN INVESTMENT IN
THE OFFERED SECURITIES ARISING
S-12
UNDER TAX LAWS OF ANY PROVINCE OR TERRITORY OF CANADA OR TAX
LAWS OF ANY JURISDICTION OTHER THAN CANADA.
This summary is based on the current provisions of the Income
Tax Act, the regulations thereunder, specific proposals to amend
the Income Tax Act or the regulations publicly announced by the
Minister of Finance before the date of this prospectus
supplement, our counsels understanding of the current
administrative practice of Canada Revenue Agency, and the
current provisions of the international tax convention entered
into by Canada and the United States, but does not otherwise
take into account or anticipate changes in the law, whether by
judicial, governmental or legislative decisions or action, nor
is it exhaustive of all possible Canadian federal income tax
consequences. It furthermore does not take into account or
consideration tax legislation of any province or territory of
Canada or any jurisdiction other than Canada. This summary is of
a general nature only and is not intended to be, and should not
be interpreted as, legal or tax advice to any particular holder
of an Offered Security including the Non-Resident Holders.
Under applicable federal law, the Company is not required to
withhold tax from interest paid by it on the Offered Securities
to Non-Resident Holders.
Under the Income Tax Act, related persons (as defined therein)
are deemed not to deal at arms length and it is a question
of fact whether persons not related to each other deal at
arms length. No other tax on income (including taxable
capital gains) is payable in respect of the purchase, holding,
redemption or disposition of the Offered Securities or the
receipt of interest or any premium thereon by Non-Resident
Holders with whom the Company deals at arms length.
UNDERWRITING
Subject to the terms and conditions set forth in the pricing
agreement, dated the date of this prospectus supplement, between
the Company and the underwriters named below, the Company has
agreed to sell to each of the underwriters, and each of such
underwriters has severally agreed to purchase, the principal
amount of each series of Offered Securities set forth opposite
its name below:
|
|
|
|
|
|
|
|
|
|
|
Principal Amount | |
|
Principal Amount of | |
|
|
of Notes | |
|
Debentures | |
Underwriter |
|
US$ | |
|
US$ | |
|
|
| |
|
| |
Citigroup Global Markets Inc.
|
|
US$ |
67,500,000 |
|
|
US$ |
81,000,000 |
|
J.P. Morgan Securities Inc.
|
|
|
67,500,000 |
|
|
|
81,000,000 |
|
Banc of America Securities LLC
|
|
|
22,500,000 |
|
|
|
27,000,000 |
|
BMO Capital Markets Corp.
|
|
|
22,500,000 |
|
|
|
27,000,000 |
|
Scotia Capital (USA) Inc.
|
|
|
22,500,000 |
|
|
|
27,000,000 |
|
RBC Capital Markets Corporation
|
|
|
15,834,000 |
|
|
|
19,000,000 |
|
BNP PARIBAS Securities Corp.
|
|
|
15,833,000 |
|
|
|
19,000,000 |
|
Wachovia Capital Markets, LLC
|
|
|
15,833,000 |
|
|
|
19,000,000 |
|
|
|
|
|
|
|
|
Total
|
|
US$ |
250,000,000 |
|
|
US$ |
300,000,000 |
|
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|
|
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|
The pricing agreement provides that the obligations of the
several underwriters to purchase the Offered Securities offered
hereby are subject to certain conditions and that the
underwriters will purchase all of the Offered Securities offered
by this prospectus supplement if any of these Offered Securities
are purchased.
We have been advised by the representatives of the underwriters
that the underwriters propose to offer the Offered Securities
directly to the public at the public offering prices set forth
on the cover page of this prospectus supplement and to certain
dealers at such prices less a concession not in excess of 0.400%
of the principal amount of the Notes and 0.500% of the principal
amount of the Debentures. The underwriters may allow, and such
dealers may reallow, a concession not in excess of 0.250% of the
principal amount of the Notes and 0.250% of the principal amount
of the Debentures to certain other dealers. After the initial
public offering, representatives of the underwriters may change
the offering price and other selling terms.
We estimate that expenses relating to this offering, excluding
the underwriting commissions, will be approximately US$500,000.
The underwriters have agreed to reimburse the Company for
certain expenses incurred in connection with the offering.
S-13
We have agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of
1933, and to contribute to payments the underwriters may be
required to make in respect of any of these liabilities.
The Offered Securities are new issues of securities with no
established trading market. The Offered Securities will not be
listed on any securities exchange or on any automated dealer
quotation system. The underwriters may make a market in the
Offered Securities after completion of the offering, but will
not be obligated to do so and may discontinue any market making
activities at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Offered
Securities or that an active public market for the Offered
Securities will develop. If an active public trading market for
the Offered Securities does not develop, the market price and
liquidity of the Offered Securities may be adversely affected.
In connection with the offering of the Offered Securities,
certain of the underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of the Offered
Securities. Specifically, the underwriters may overallot in
connection with the offering, creating a short position. In
addition, the underwriters may bid for, and purchase, the
Offered Securities in the open market to cover short positions
or to stabilize the price of the Offered Securities. Any of
these activities may stabilize or maintain the market price of
the Offered Securities above independent market levels, but no
representation is made hereby of the magnitude of any effect
that the transactions described above may have on the market
price of the Offered Securities. The underwriters will not be
required to engage in these activities, and may end any of these
activities without notice.
The underwriters have performed investment banking, commercial
banking and advisory services for us from time to time for which
they have received customary fees and expenses. The underwriters
may, from time to time, engage in transactions with and perform
services for us in the ordinary course of their business.
Citigroup Global Markets Inc., J.P. Morgan Securities Inc., Banc
of America Securities LLC, BMO Capital Markets Corp., Scotia
Capital (USA) Inc., RBC Capital Markets Corporation, BNP PARIBAS
Securities Corp. and Wachovia Capital Markets, LLC (the
Connected Underwriters) are affiliates of banks
which are members of a syndicate of financial institutions that
has made credit facilities available to the Company and to which
the Company is currently indebted. Accordingly, under applicable
securities laws, the Company may be considered a connected
issuer to the Connected Underwriters. As of
August 31, 2007, letters of credit under the revolving
credit facility of the Company amounted to $58 million. The
Company is not in default of its obligations to such financial
institutions. The decision to issue the Offered Securities and
the determination of the terms of the distribution were made
through negotiation between the Company, on the one hand, and
the underwriters, on the other hand. The banks of which the
Connected Underwriters are respectively affiliates did not have
any involvement in such decision or determination. The
underwriters will not receive any benefit in connection with
this offering other than a portion of the underwriting
commissions payable by the Company under the offering.
Each underwriter has represented that it has not offered or
sold, and has agreed not to offer or sell, directly or
indirectly, in Canada, any of the Offered Securities in
violation of the securities laws of any province or territory of
Canada.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by the
Senior Vice-President Public Affairs, Chief Legal Officer and
Corporate Secretary of the Company, with respect to matters of
Canadian federal and Québec laws, and by Davis Polk &
Wardwell, with respect to matters of U.S. law. The validity of
the Offered Securities will be passed upon for the underwriters
by Sullivan & Cromwell LLP. Davis Polk & Wardwell and
Sullivan & Cromwell LLP may rely on the opinion of the
Senior Vice-President Public Affairs, Chief Legal Officer and
Corporate Secretary of the Company as to all matters of Canadian
federal and Québec laws.
As of September 19, 2007, the partners and associates of
Davis Polk & Wardwell and Sullivan & Cromwell LLP owned
beneficially, directly or indirectly, less than 1% of the
outstanding common shares of the Company.
S-14
This short form base shelf prospectus constitutes a public
offering of these securities only in those jurisdictions where
they may be lawfully offered for sale and therein only by
persons permitted to sell such securities. No securities
regulatory authority has expressed an opinion about these
securities and it is an offense to claim otherwise.
SHORT FORM BASE SHELF PROSPECTUS
CANADIAN NATIONAL RAILWAY COMPANY
US$1,500,000,000
Debt Securities
Canadian National Railway Company (CN or the
Company) may offer and issue from time to time
secured or unsecured debt securities (the
Securities) in one or more series in an aggregate
principal amount not to exceed US$1,500,000,000, or the
equivalent, based on the applicable exchange rate at the time of
offering, in Canadian dollars, U.S. dollars or such other
currencies or units based on or relating to such other
currencies, as shall be designated by the Company at the time of
offering.
The specific terms of any offering of Securities will be set
forth in a prospectus supplement (a prospectus
supplement) including, where applicable, the title of the
debt securities, any limit on the aggregate principal amount of
the debt securities, whether payment on the debt securities will
be senior or subordinated to the Companys other
liabilities and obligations, whether the debt securities will
bear interest, the interest rate or method of determining the
interest rate, whether any conversion or exchange rights attach
to the debt securities, whether the Company may redeem the debt
securities at its option and any other specific terms. The
Company reserves the right to include in a prospectus supplement
specific variable terms pertaining to the Securities that are
not within the descriptions set forth in this prospectus.
All information permitted under applicable laws to be omitted
from this prospectus will be contained in one or more prospectus
supplements that will be delivered to purchasers together with
this prospectus. Each prospectus supplement will be incorporated
by reference into this prospectus for the purposes of securities
legislation as of the date of the prospectus supplement and only
for the purposes of the distribution of the Securities to which
the prospectus supplement pertains.
The Company may sell Securities to or through underwriters or
dealers purchasing as principal or through agents. The
applicable prospectus supplement will identify each underwriter
or agent with respect to the Securities and will set forth the
terms of the offering of such Securities, including, to the
extent applicable, the proceeds to the Company, the underwriting
fees or agency commissions, and any other fees, commissions or
concessions to be allowed or reallowed to dealers. See
Plan of Distribution.
This offering is made by a Canadian issuer that is permitted,
under a multijurisdictional disclosure system adopted by the
United States, to prepare this prospectus in accordance with the
disclosure requirements of all the provinces and territories of
Canada. Prospective investors should be aware that such
requirements are different from those of the United
States.
Prospective investors should be aware that the acquisition of
the securities described herein may have tax consequences both
in the United States and in Canada. Such consequences for
investors who are resident in, or citizens of, the
United States may not be described fully herein or in any
applicable prospectus supplement.
The enforcement by investors of civil liabilities under
United States federal securities laws may be affected adversely
by the fact that the Company is incorporated or organized under
the laws of Canada, that some or all of its officers and
directors may be residents of Canada, that some or all of the
underwriters or experts named in the registration statement may
be residents of Canada and that all or a substantial portion of
the assets of the Company and said persons may be located
outside the United States.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE IN THE
UNITED STATES.
In this prospectus, unless the context otherwise indicates,
the Company and CN each refer to
Canadian National Railway Company and its subsidiaries. All
dollar amounts referred to in this prospectus are in Canadian
dollars unless otherwise specifically expressed.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents, filed with the securities commission or
other similar authority in each of the provinces and territories
of Canada, are incorporated by reference in and form an integral
part of this prospectus:
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(1) |
the Annual Information Form of the Company dated March 21,
2006 for the year ended December 31, 2005 (the
AIF); |
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(2) |
the audited consolidated financial statements of the Company for
the years ended December 31, 2005 and 2004 and related
notes thereto, together with the Report of Independent
Registered Public Accounting Firm thereon (the
Consolidated Financial Statements), prepared in
accordance with U.S. generally accepted accounting principles
(GAAP) as contained in the Companys 2005
Annual Report; |
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(3) |
the Companys Managements Discussion and Analysis
contained in the Companys 2005 Annual Report; |
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(4) |
the Companys Management Information Circular dated
March 7, 2006 prepared in connection with the
Companys annual meeting of shareholders held on
April 21, 2006; and |
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(5) |
the unaudited interim consolidated financial statements of the
Company for the three months ended March 31, 2006 and
related notes thereto prepared in accordance with U.S. GAAP,
including the Companys Managements Discussion and
Analysis relating thereto. |
Any document of the type referred to in the preceding paragraph
and any material change reports (excluding confidential material
change reports) filed by the Company with securities commissions
or similar authorities in the provinces and territories of
Canada subsequent to the date of this prospectus and prior to
the termination of any offering under any prospectus supplement
shall be deemed to be incorporated by reference into this
prospectus.
Any statement contained herein or in a document incorporated
or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded, for purposes of this prospectus,
to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. The modifying or superseding statement need not state
that it has modified or superseded a prior statement or include
any other information set forth in the document that it modifies
or supersedes. The making of a modifying or superseding
statement shall not be deemed an admission for any purposes that
the modified or superseded statement, when made, constituted a
misrepresentation, an untrue statement of a material fact or an
omission to state a material fact that is required to be stated
or that is necessary to make a statement not misleading in light
of the circumstances in which it was made. Any statement so
modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this
prospectus.
Upon a new annual information form and the related annual
financial statements being filed by the Company with, and, where
required, accepted by, the applicable securities regulatory
authorities, the previous annual information form, the previous
annual financial statements and all quarterly financial
statements, material change reports and annual filings or
information circulars filed prior to the commencement of the
Companys fiscal year with respect to which the new annual
information form is filed shall be deemed no longer to be
incorporated by reference into this prospectus for purposes of
future offers and sales of Securities hereunder.
A prospectus supplement containing the specific terms in respect
of any Securities, updated disclosure of earnings coverage
ratios, if applicable, and other information in relation to the
Securities will be delivered to purchasers of such Securities
together with this prospectus and will be deemed to be
incorporated into this prospectus as of the date of such
supplement, but only for purposes of the offering of such
Securities.
Copies of the documents incorporated herein by reference may be
obtained on request without charge from the Corporate Secretary,
Canadian National Railway Company, 935 de La
Gauchetière Street West, Montreal, Québec,
H3B 2M9 (telephone:
(514) 399-7091),
and are also available electronically at www.sedar.com.
AVAILABLE INFORMATION
In addition to its continuous disclosure obligations under the
securities laws of the provinces of Canada, the Company is
subject to the information requirements of the United States
Securities Exchange Act of 1934, as amended (the Exchange
Act), and in accordance therewith files reports and other
information with the Securities and Exchange Commission
(SEC). Under the multijurisdictional disclosure
system adopted by the United States, such reports and other
information may be prepared in accordance with the disclosure
requirements of Canada, which
2
requirements are different from those of the United States. Such
reports and other information, when filed by the Company in
accordance with such requirements, can be inspected and copied
at the Public Reference Room maintained by the SEC at
100 F Street, N.E., Washington, D.C. 20549. The public
may obtain information on the operations of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site that contains reports and other information
regarding issuers that file electronically with the SEC. The
address of that site is http://www.sec.gov.
The Company has filed with the SEC a Registration Statement on
Form F-9 (the
Registration Statement) under the United States
Securities Act of 1933, as amended (the Securities
Act), with respect to the Securities and of which this
prospectus is a part. This prospectus does not contain all of
the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and
regulations of the SEC. Reference is made to the Registration
Statement and the exhibits thereto for further information with
respect to the Company and the Securities.
STATEMENT REGARDING FORWARD LOOKING INFORMATION
This prospectus includes or incorporates by reference
forward looking statements within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995 and under
Canadian securities laws. All statements, other than statements
of historical facts, included or incorporated by reference in
this prospectus that address activities, events or developments
that CN expects or anticipates will or may occur in the future,
including such things as future capital expenditures (including
the amount and nature thereof), business strategies and measures
to implement strategies, competitive strengths, goals, expansion
and growth of its business and operations, plans and references
to the future success of the Company and the companies or
partnerships in which it has equity investments, and other such
matters, are forward looking statements. These forward looking
statements are based on certain assumptions and analyses made by
CN in light of its experience and its perception of historical
trends, current conditions and expected future developments and
synergies resulting from the transactions referred to herein as
well as other factors it believes are appropriate in the
circumstances. Implicit in these statements, particularly in
respect of growth opportunities, is the assumption that the
positive economic trends in North America and Asia will
continue. However, whether actual results and developments will
conform with the expectations and predictions of the Company is
subject to a number of risks and uncertainties, including the
special considerations and risks discussed in this prospectus
and the documents incorporated herein by reference; general
economic, market or business conditions; the opportunities (or
lack thereof) that may be presented to and pursued by CN and the
companies or partnerships in which it has equity investments;
competitive actions by other companies; changes in laws or
regulations; actions by regulators; and other factors, many of
which are beyond the control of the Company and the companies or
partnerships in which it has equity investments. Consequently,
all of the forward looking statements made in this prospectus
and the documents incorporated herein by reference are qualified
by these cautionary statements, and there can be no assurance
that the actual results or developments anticipated by CN will
be realized or, even if substantially realized, that they will
have the expected consequences to, or effects on, CN and the
companies or partnerships in which it has equity investments.
THE COMPANY
Overview
CN, directly and through its subsidiaries, is engaged in the
rail and related transportation business. CNs network of
approximately 20,000 route miles of track spans Canada and
mid-America, connecting three coasts: the Atlantic, the Pacific
and the Gulf of Mexico. CNs marketing alliances, interline
agreements, co-production arrangements and routing protocols, in
addition to its extensive network, give CN customers access to
all three North American Free Trade Agreement
(NAFTA) nations.
The Companys registered and head office is located at 935
de La Gauchetière Street West, Montreal, Québec,
H3B 2M9, and its telephone number is (514) 399-5430.
The Companys common shares are listed for trading on the
Toronto Stock Exchange under the symbol CNR and the
New York Stock Exchange under the symbol CNI.
USE OF PROCEEDS
Except as may otherwise be set forth in a prospectus supplement,
the net proceeds from the sale of Securities will be used for
general corporate purposes, including the redemption and
refinancing of outstanding indebtedness, share repurchases,
acquisitions and other business opportunities.
3
CAPITALIZATION
The following table sets forth the capitalization of the Company
as at December 31, 2005 and March 31, 2006 based on
U.S. GAAP. The capitalization of the Company does not give
effect to the issuance of Securities that may be issued pursuant
to this prospectus and any prospectus supplement, since the
aggregate principal amounts and terms of such Securities are not
presently known.
This table should be read in conjunction with the audited
consolidated financial statements and the unaudited interim
consolidated financial statements of CN and related notes
thereto incorporated by reference in this prospectus.
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December 31, 2005 | |
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March 31, 2006 | |
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(In millions, except percentages) | |
Current portion of long-term debt
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$ |
408 |
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$ |
402 |
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Long-term debt
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4,677 |
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4,860 |
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Total debt
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5,085 |
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5,262 |
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Shareholders equity
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Common shares
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4,580 |
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4,591 |
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Accumulated other comprehensive loss
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(222 |
) |
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(245 |
) |
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Retained earnings
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4,891 |
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4,856 |
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Total shareholders equity
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9,249 |
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9,202 |
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Total capitalization
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$ |
14,334 |
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$ |
14,464 |
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Ratio of total debt to total capitalization
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35.5 |
% |
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36.4 |
% |
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EARNINGS COVERAGES
The following consolidated financial ratios are calculated for
the twelve-month periods ended December 31, 2005 and
March 31, 2006 and give effect to the issuance of all
long-term debt of the Company and repayment or redemption
thereof as of these dates. These coverage ratios do not give
effect to the issuance of Securities that may be issued pursuant
to this prospectus and any prospectus supplement, since the
aggregate principal amounts and the terms of such Securities are
not presently known.
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Twelve months ended | |
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Twelve months ended | |
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December 31, 2005 | |
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March 31, 2006 | |
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Earnings coverage (U.S. GAAP)
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8.82 times |
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9.16 times |
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Earnings coverage is equal to net income before interest and
income taxes divided by interest expense on all debts.
Based on U.S. GAAP, the Companys interest expense
requirements amounted to $299 million for both the
twelve-month periods ended December 31, 2005 and
March 31, 2006. Also based on U.S. GAAP, the Companys
earnings before interest expense and income taxes for the
twelve-month periods ended December 31, 2005 and
March 31, 2006 were $2,636 million and
$2,738 million, respectively, which is 8.82 times and 9.16
times the Companys interest expense requirements for these
periods.
If the Company offers debt securities having a term to maturity
in excess of one year under this prospectus and a prospectus
supplement, the prospectus supplement will include earnings
coverage ratios giving effect to the issuance of such securities.
DESCRIPTION OF SECURITIES
The following description sets forth certain general terms and
provisions of the Securities. The Company may issue Securities
either separately, or together with or upon the conversion of or
in exchange for other securities. The particular terms and
provisions of each series of Securities CN may offer will be
described in greater detail in the related prospectus supplement
and which may provide information that is different from this
prospectus. The Company reserves the right to include in a
prospectus supplement specific variable terms pertaining to the
Securities that are not within the descriptions set forth in
this prospectus. Senior Securities of CN may be issued under a
senior indenture, dated as of May 1, 1998 (the
Canadian Senior Indenture), as amended and restated
by an Amended and Restated Trust Indenture dated as of
June 1, 1998, between the Company and BNY Trust Company of
Canada (formerly The Trust Company of Bank of Montreal), as
trustee, or under a senior indenture dated as of June 1,
1998 between the
4
Company and The Bank of New York, as trustee (the U.S.
Senior Indenture and together with the Canadian Senior
Indenture, the Senior Indentures). Senior Securities
issued under the Canadian Senior Indenture will not be offered
or sold to persons in the United States. Subordinated Securities
may be issued under a subordinated indenture, dated as of
June 23, 1999 (the Subordinated Indenture), as
amended and supplemented, between the Company and BNY Trust
Company of Canada (formerly The Trust Company of Bank of
Montreal). Securities may also be issued under new indentures
between the Company and a trustee or trustees as will be
described in a prospectus supplement for such Securities. The
Senior Indentures and the Subordinated Indenture are sometimes
referred to collectively as the indentures, and the
trustees under the indentures are sometimes referred to
collectively as the trustees.
The following summary of certain provisions of the indentures
and the Securities is not meant to be complete. For more
information, you should refer to the full text of the indentures
and the Securities, including the definitions of certain terms
not defined herein, and the related prospectus supplement.
Prospective investors should rely on information in the
prospectus supplement if it is different from the following
information.
Unless otherwise indicated, references to CN or the
Company in this description of Securities are to
Canadian National Railway Company but not to any of its
subsidiaries.
General
The indentures do not limit the aggregate principal amount of
Securities CN or any of its subsidiaries may issue and do not
limit the amount of other indebtedness they may incur. CN may
issue Securities from time to time in separate series.
Securities may also be issued pursuant to a medium-term note
program. Unless otherwise specified in a prospectus supplement,
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Securities will be unsecured obligations of CN; |
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senior Securities will rank equally with all other unsecured and
unsubordinated indebtedness of CN; and |
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subordinated Securities will be subordinate, in right of
payment, to all senior indebtedness (as defined in the
Subordinated Indenture). |
A prospectus supplement will describe the following terms of any
series of Securities CN may offer and may include the following:
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the title of the Securities; |
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any limit on the aggregate principal amount of Securities that
may be issued; |
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the date(s) of maturity; |
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the rate(s) of interest, if any, or the method of calculation,
the date(s) interest will begin to accrue, the date(s) interest
will be payable and the regular record date(s) for interest
payment dates or the method for determining such date(s); |
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the covenants applicable to the Securities; |
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any mandatory or optional sinking fund or analogous provisions; |
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the date(s), if, any, and the price(s) at which CN is obligated,
pursuant to any mandatory sinking fund provisions or otherwise,
to redeem, or at a holders option to purchase, such series
of Securities and other related terms and provisions; |
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the index used to determine any payments to be made on the
Securities; |
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the currency or currencies of any payments to be made on the
Securities; |
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whether or not the Securities will be issued in global form,
their terms and the depositary; |
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the terms upon which a global note may be exchanged in whole or
in part for other Securities; |
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the terms, if any, under which the Securities are convertible
into common shares or any other security of the Company; and |
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any other terms of the series of Securities. |
In addition to new issues of Securities, this prospectus may be
used in connection with the remarketing of outstanding
Securities, in which case the terms of the remarketing and of
the remarketed Securities will be set forth in the prospectus
supplement.
5
Conversion or Exchange of Securities
If applicable, the prospectus supplement will set forth the
terms on which a series of Securities may be converted into or
exchanged for other securities of CN. These terms will include
whether conversion or exchange is mandatory, or is at the option
of the holder or of CN. CN also will describe in the prospectus
supplement how it will calculate the number of securities that
holders of Securities would receive if they convert or exchange
their Securities.
Events of Default
Under the indentures, an event of default with
respect to any series of Securities includes any of the
following:
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failure to pay any principal or premium, when due; |
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failure to pay any interest when due, and this failure continues
for 30 days; |
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failure to pay any sinking fund installment when due; |
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failure to perform any covenant or agreement relating to the
Securities or in the indenture, and the failure continues for
60 days after written notice by the trustee or by holders
of at least 25% in aggregate principal amount outstanding; |
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failure to pay principal when due, or acceleration, of any
indebtedness of CN in an aggregate principal amount exceeding
$75 million, and such acceleration is not rescinded or
annulled within 30 days after written notice by the trustee
or holders of at least 25% in aggregate principal amount
outstanding (this provision applies to the Senior Indentures
only); |
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certain events of bankruptcy, insolvency or reorganization; and |
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any other event of default provided for that series of
Securities. |
If an event of default occurs and is continuing, either the
trustee or the holders of at least 25% in principal amount of
the outstanding Securities of any series affected by the
default, may notify CN (and the trustee, if notice is given by
the holders) and declare that the unpaid principal is due and
payable immediately. However, subject to certain conditions, the
holders of a majority in aggregate principal amount of the
Securities of the affected series can rescind and annul this
declaration for accelerated payment. CN will furnish the
trustees with an annual certificate as to compliance with
certain covenants contained in the particular indenture.
No event of default with respect to any particular series of
Securities necessarily constitutes an event of default with
respect to any other series of Securities.
Subordinated Securities
The terms of a series of subordinated Securities will be set
forth in the relevant indenture and the prospectus supplement.
The subordinated Securities will be unsecured obligations of CN
and will be subordinate in right of payment to certain other
indebtedness of CN. Unless otherwise indicated in the related
prospectus supplement, the indentures do not contain any
restriction on the amount of senior or subordinated indebtedness
that CN may incur. The subordinated Securities will be
subordinate to senior debt securities of CN.
Satisfaction and Discharge of Indentures
CN may terminate its obligation with respect to a series of
Securities under the indentures if:
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all the outstanding Securities of a series have been delivered
to the trustee for cancellation; |
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CN has paid all sums it is required to pay under the respective
indentures; or |
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CN deposits with the trustee, in trust, sufficient funds, or
governmental securities, to cover payments due on all Securities
of such series for principal, premium, if any, and interest and
any other sums due under the indentures to the stated maturity
date or a redemption date of the Securities. |
Such defeasance is subject to the Company meeting certain
conditions set forth in the indentures.
Modification and Waiver
CN and the trustees may modify or amend the indentures by
obtaining the
662/3%
approval of the holders of the outstanding Securities of each
series that is affected in the case of the Senior Indentures and
the majority approval in
6
the case of the Subordinated Indenture. However, certain changes
can be made only with the consent of each holder of an
outstanding series of Securities. In particular, each holder of
the series must consent to changes in:
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the stated maturity date; |
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the principal, premium, or interest payments, if any; |
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the place or currency of any payment; |
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the rights of holders to enforce payment; |
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the percentage in principal amount of outstanding Securities of
any series, the consent of whose holders is needed to modify,
amend or waive certain provisions of the indentures or certain
defaults; or |
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if applicable, the subordination provisions. |
Except as otherwise specified for a series of Securities, the
holders of at least
662/3%
in aggregate principal amount of the outstanding Securities of
any series issued in the case of the Senior Indentures, and at
least a majority thereof in the case of the Subordinated
Indenture, can consent, or cause the trustees, on behalf of the
holders of the entire series, to waive compliance with certain
provisions of the relevant indenture. In addition, holders of at
least a majority in principal amount of the outstanding
securities of a series can consent to, or cause the trustees to
waive any past default under the relevant indentures, except for
the following:
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a default in any payments due under the U.S. Senior Indenture or
the Subordinated Indenture or in payment of principal under the
Canadian Senior Indenture; and |
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a default under an indenture provision that can be modified or
amended only with the consent of each holder of an outstanding
series of Securities. |
Consolidation, Merger and Sale of Assets
Each indenture provides that CN may consolidate, amalgamate or
merge with or into any other corporation or sell, convey or
lease all or substantially all of its property to any other
corporation authorized to acquire and operate the same; provided
that upon any such consolidation, amalgamation, merger, sale,
conveyance or lease, (i) the successor entity (if other
than CN) is organized under the law of a Canadian or U.S.
jurisdiction; (ii) the payment of the principal and
premium, if any, and interest on all of the Securities according
to their terms, and the performance of all the covenants and
conditions under that indenture to be performed by CN, shall be
expressly assumed, by supplemental indenture satisfactory to the
relevant trustee, by the corporation (if other than CN) formed
by such consolidation or amalgamation, or into which CN shall
have been merged, or by the corporation which shall have
acquired or leased such property; and (iii) no event of
default or event that could give rise to an event of default
will have occurred and be continuing.
Restrictions on Secured Debt
CN has covenanted in the Senior Indentures that it will not, nor
will it permit a subsidiary to, create, issue, incur, assume or
guarantee, any indebtedness for money borrowed, or guarantees of
such indebtedness, now or hereafter existing which is secured by
any mortgage, pledge, hypothec, lien, security interest,
privilege, conditional sale or other title retention agreement
or similar encumbrance (a Mortgage) on any present
or future Railway Properties of CN or any of its Canadian or
United States subsidiaries or on any shares of stock of any
Railroad Subsidiary, without first making effective provision
whereby all outstanding Securities issued thereunder shall be
secured by the Mortgage equally and ratably with such other
indebtedness or guarantee thereby secured. The negative pledge
covenant is subject to certain exceptions. For example, this
restriction excludes any Mortgage upon Railway Properties
existing or created at the time the Railway Properties are
acquired, or Mortgages existing on the shares or to secure
indebtedness of a corporation at the time such corporation
becomes a subsidiary, and any extension, renewal or replacement
of any such Mortgage. As used in such covenant, the term
Railway Properties means all main and branch lines
of railway located in Canada or the United States, including all
real property used as the right of way for such lines; the term
Railroad Subsidiary means a subsidiary whose
principal assets are Railway Properties; and the term
subsidiary, subject to certain exceptions, means a
corporation a majority of the outstanding voting shares of which
are owned, directly or indirectly, by CN or by one or more
subsidiaries of CN, or by CN and one or more subsidiaries of CN.
7
PLAN OF DISTRIBUTION
The Company may sell the Securities to or through underwriters
or dealers purchasing as principal or through agents.
The prospectus supplement will set forth the terms of the
offering and the method of distribution, including the name or
names of any underwriters or agents, the purchase price or
prices of the Securities, the proceeds to the Company from the
sale of the Securities, any public offering price, any
underwriting fee, discount or commission and any fees,
discounts, concessions or commissions allowed or reallowed or
paid by any underwriter to other dealers. Any initial public
offering price and any fees, discounts, concessions or
commissions allowed or reallowed or paid to dealers may be
changed from time to time. Unless otherwise set forth in the
prospectus supplement relating thereto, the obligations of the
underwriters to purchase the Securities will be subject to
certain conditions and the underwriters will be obligated to
purchase all of the Securities if any are purchased.
The Securities may be sold from time to time in one or more
transactions at a fixed price or prices which may be changed or
at market prices prevailing at the time of sale, or at prices
related to such prevailing market prices or at negotiated prices.
Underwriters, dealers and agents who participate in the
distribution of the Securities may be entitled under agreements
to be entered into with the Company to indemnification by the
Company against certain liabilities, including liabilities under
securities legislation, or to contribution with respect to
payments which such underwriters, dealers or agents may be
required to make in respect thereof. Such underwriters, dealers
and agents may be customers of, engage in transactions with or
perform services for the Company in the ordinary course of
business.
One or more firms, referred to as remarketing firms,
may also offer or sell Securities, if the prospectus supplement
so indicates, in connection with a remarketing arrangement upon
their purchase. Remarketing firms will act as principals for
their own accounts or as agents for the Company. These
remarketing firms will offer or sell the Securities pursuant to
the terms of the Securities. The prospectus supplement will
identify any remarketing firm and the terms of its agreement, if
any, with the Company and will describe the remarketing
firms compensation. Remarketing firms may be deemed to be
underwriters in connection with the Securities they remarket.
Remarketing firms may be entitled under agreements that may be
entered into with the Company to indemnification by the Company
against certain civil liabilities, including liabilities under
securities legislation, or to contribution in respect thereof,
and may be customers of, engage in transactions with or perform
services for the Company in the ordinary course of business.
RISK FACTORS
Investment in the Securities is subject to a number of risks.
Before deciding whether to invest in any Securities, investors
should carefully consider the risks identified and discussed in
the AIF and the Managements Discussion and Analysis of the
Company which are incorporated by reference herein (including
subsequently filed documents incorporated by reference) and
those described or incorporated by reference in a prospectus
supplement relating to a specific offering of Securities.
TAXATION
The applicable prospectus supplement will describe the material
Canadian and United States federal income tax consequences to an
initial investor acquiring the Securities, including whether
payments of principal, premium, if any, and interest in respect
of the Securities will be subject to Canadian non-resident
withholding tax and any such consequences relating to Securities
payable in a currency other than United States dollars,
Securities that are issued at an original issue discount or
subject to early redemption or other special terms.
LEGAL MATTERS
Unless otherwise specified in the prospectus supplement relating
to a series of Securities, certain legal matters will be passed
upon for the Company by the Senior Vice-President Public
Affairs, Chief Legal Officer and Corporate Secretary of the
Company and by Davis Polk & Wardwell, with respect to
matters of United States law. Davis Polk & Wardwell may rely
on the opinion of the Senior Vice-President Public Affairs,
Chief Legal Officer and Corporate Secretary of the Company as to
all matters of Canadian federal and Québec laws.
As of May 9, 2006, the partners and associates of Davis
Polk & Wardwell owned beneficially, directly or indirectly,
less than 1% of the outstanding common shares of the Company.
8
INDEPENDENT AUDITORS
The audited consolidated financial statements of the Company for
each of the two years in the period ended December 31, 2005
incorporated by reference in this prospectus have been so
incorporated in reliance on the report of KPMG LLP, independent
accountants.
ENFORCEABILITY OF CIVIL LIABILITIES
UNDER THE U.S. FEDERAL SECURITIES LAWS
The Company is a Canadian company and is governed by the laws of
Canada. A substantial portion of its assets are located outside
the United States and some or all of the directors and officers
and some or all of the experts named herein are residents of
Canada. As a result, it may be difficult for investors to effect
service within the United States upon the Company and those
directors, officers and experts, or to realize in the United
States upon judgments of courts of the United States predicated
upon civil liability of the Company and such directors, officers
or experts under the United States federal securities laws. The
Company has been advised by its Chief Legal Officer that there
is doubt as to the enforceability in a Canadian court in
original actions, or in actions to enforce judgments of United
States courts, of civil liabilities predicated upon United
States federal securities laws.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the SEC as part of
the Registration Statement of which this prospectus is a part:
(i) the documents listed in the first paragraph under
Documents Incorporated by Reference; (ii) the
consent of KPMG LLP, independent accountants; (iii) powers
of attorney from directors and officers of the Company; and
(iv) the U.S. Senior Indenture and the Subordinated
Indenture.
STATUTORY RIGHTS
Securities legislation in certain of the provinces and
territories of Canada provides purchasers with the right to
withdraw from an agreement to purchase securities. This right
may be exercised within two business days after receipt or
deemed receipt of a prospectus and any amendment. In several of
the provinces and territories, securities legislation further
provides a purchaser with remedies for rescission or, in some
jurisdictions, damages if the prospectus and any amendment
contains a misrepresentation or is not delivered to the
purchaser, provided that the remedies for rescission or damages
are exercised by the purchaser within the time limit prescribed
by the securities legislation of the purchasers province
or territory. The purchaser should refer to any applicable
provisions of the securities legislation of the purchasers
province or territory for the particulars of these rights or
consult with a legal advisor.
9
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors
Canadian National Railway Company
We have read the short form base shelf prospectus of Canadian
National Railway Company (CN) dated
May 9, 2006 relating to the offering of up to
US$1,500,000,000 of Debt Securities of CN. We have complied with
Canadian generally accepted standards for an auditors
involvement with offering documents.
We consent to the incorporation by reference in the
above-mentioned prospectus of our report to the shareholders of
CN on the consolidated balance sheets of CN as at
December 31, 2005 and December 31, 2004, and the
consolidated statements of income, comprehensive income, change
in shareholders equity and cash flows for each of the
years of the three-year period ended December 31, 2005. Our
report is dated January 24, 2006.
(Signed) KPMG LLP
Chartered Accountants
Montréal, Canada
May 9, 2006
10
CERTIFICATE OF THE COMPANY
Dated: May 9, 2006
This short form prospectus, together with the documents
incorporated herein by reference, constitutes full, true and
plain disclosure of all material facts relating to the
securities offered by this prospectus as required by the
securities legislation of British Columbia, Alberta,
Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia,
Prince Edward Island, Newfoundland and Labrador, Northwest
Territories, Nunavut and Yukon and does not contain any
misrepresentation likely to affect the value or the market price
of the securities to be distributed. For the purpose of the
Province of Québec, this simplified prospectus, together
with the documents incorporated herein by reference and as
supplemented by the permanent information record, contains no
misrepresentation that is likely to affect the value or the
market price of the securities to be distributed.
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(Signed) E. Hunter
Harrison
President and Chief Executive Officer
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(Signed) Claude Mongeau
Executive Vice-President and
Chief Financial Officer |
On behalf of the Board of Directors
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(Signed) David G.A.
McLean
Director and Chairman of the Board
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(Signed) Denis Losier
Director |
11
US$550,000,000
Canadian National Railway Company
US$250,000,000 5.850% Notes due 2017
US$300,000,000 6.375% Debentures due 2037
PROSPECTUS SUPPLEMENT
September 19, 2007
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