CALGARY, Alberta and JACKSONVILLE, Fla. – June 28, 2023 – Canadian Pacific Kansas City (TSX: CP) (NYSE: CP) (CPKC), CSX Corporation (NASDAQ: CSX) (CSX) and Genesee & Wyoming Inc. (G&W) today announced they have reached agreements that when completed will create a new direct CPKC-CSX interchange connection in Alabama.
As part of the series of proposed transactions, CPKC and CSX would each acquire or operate portions of Meridian & Bigbee Railroad, L.L.C. (MNBR), a G&W-owned railway in Mississippi and Alabama, to establish a new freight corridor for shippers that connects Mexico, Texas and the U.S. Southeast.
“This strategic acquisition will bring more shipping options to intermodal, automotive and other customers by providing a new, efficient corridor connecting expanding markets in Mexico, Texas and the U.S. Southeast,” said Keith Creel, CPKC President and Chief Executive Officer. “With this new east-west connection taking advantage of each railway's routes and service, we can extend our reach converting more freight traffic to rail and off our highways.”
“CSX is excited to establish this new interchange connection with CPKC, which provides shippers with a compelling transportation option with access to markets in Texas and Mexico as well as into the heart of the thriving and dynamic U.S. Southeast,” said Joe Hinrichs, President and Chief Executive Officer of CSX. “This new service is a demonstration of our commitment to creating product offerings for shippers that help them leverage the efficiency and sustainability advantages of rail to drive growth.”
"We are pleased to have entered into agreements with CSX and CPKC that will enable MNBR to continue providing customers with outstanding short line service from Linden, Alabama, to Meridian, Mississippi, while enabling our Class I partners to create a new connection into the Southeast U.S.,” said Jack Hellmann, G&W CEO. “At the same time, we have enhanced several agreements related to other G&W short line railroads and are collaborating on the expansion of our service to Alberta and the Alberta Industrial Heartland in conjunction with CPKC."
The MNBR runs between Meridian, Miss. and Montgomery, Ala., and currently is operated under a combination of ownership and operating agreements.
Under the agreements announced today, CPKC would acquire and operate the segment of the MNBR between Meridian and Myrtlewood, Ala. and CSX would operate the lines currently leased by MNBR east of Myrtlewood. As a result, CPKC and CSX would establish a direct CPKC-CSX interchange at or near Myrtlewood, Ala. In exchange, G&W would acquire certain Canadian properties owned by CPKC and other rights. MNBR would receive rights to continue to provide local service to existing customers on former MNBR-owned lines and connect with other railroads without interchange restrictions.
Terms of the transactions were not disclosed and will be addressed in definitive agreements that the parties have agreed to negotiate. Certain portions of the transactions are subject to regulatory review and approval from, or exemption by, the U.S. Surface Transportation Board.
Forward looking information
This news release contains certain forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws in both the U.S. and Canada. Forward-looking information includes, but is not limited to, statements concerning the parties’ expectations, beliefs, plans, goals, objectives, assumptions and statements about possible future events, conditions, and results of operations or performance. Forward-looking information may contain statements with words or headings such as “financial expectations”, “key assumptions”, “will”, “anticipate”, “believe”, “expect”, “plan”, “should”, “commit”, “outlook”, “guidance” or similar words suggesting future outcomes.
This news release contains forward-looking information relating, but not limited, to agreements between CPKC and CSX, between CPKC and G&W and between G&W and CSX to create a new direct interchange connection in Alabama, the anticipated impact of the agreements on available shipping options for customers, the effects of the agreements on access to markets in Texas, Mexico and the southeast U.S., the negotiation of definitive agreements among the parties, plans and expectations regarding the integration of a CPKC-CSX interchange, and other related matters associated with the changes in ownership and/or control, and operation of segments of the MNBR and assumptions underlying or relating to any of the foregoing.
The forward-looking information contained in this news release is based on the parties’ current expectations, estimates, projections and assumptions, having regard to the parties’ experience and the parties’ perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: changes in business strategies; the fuel efficiency of railways and the parties’ operations; the impacts of existing and planned capital investments; North American and global economic growth; commodity demand growth; sustainable industrial and agricultural production; commodity prices and interest rates; performance of the parties’ assets and equipment; sufficiency of the parties’ budgeted capital expenditures in carrying out the parties’ business plans; geopolitical conditions; applicable laws, regulations and government policies; the availability and cost of labour services and infrastructure; the satisfaction by third parties of their obligations to the parties; carbon markets, evolving sustainability strategies, and scientific or technological developments; and capital investments by third parties. Although the parties believe the expectations, estimates, projections and assumptions reflected in the forward-looking information presented herein are reasonable as of the date hereof, there can be no assurance that they will prove to be correct. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty.
Undue reliance should not be placed on forward-looking information as actual results may differ materially from those expressed or implied by forward-looking information. By its nature, CPKC's forward-looking information involves inherent risks and uncertainties that could cause actual results to differ materially from the forward looking information, including, but not limited to, the following factors: changes in business strategies and strategic opportunities; general Canadian, U.S., Mexican and global social, economic, political, credit and business conditions; risks associated with agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures, including competition from other rail carriers, trucking companies and maritime shippers in Canada, the U.S. and Mexico; North American and global economic growth and conditions; industry capacity; shifts in market demand; changes in commodity prices and commodity demand; uncertainty surrounding timing and volumes of commodities being shipped via CPKC; inflation; geopolitical instability; changes in laws, regulations and government policies, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; changes in fuel prices; disruption in fuel supplies; uncertainties of investigations, proceedings or other types of claims and litigation; compliance with environmental regulations; labour disputes; changes in labour costs and labour difficulties; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; sufficiency of budgeted capital expenditures in carrying out business plans; services and infrastructure; the satisfaction by third parties of their obligations; currency and interest rate fluctuations; exchange rates; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; trade restrictions or other changes to international trade arrangements; the effects of current and future multinational trade agreements on the level of trade among Canada, the U.S. and Mexico; climate change and the market and regulatory responses to climate change; anticipated in-service dates; success of hedging activities; operational performance and reliability; customer and other stakeholder approvals and support; regulatory and legislative decisions and actions; the adverse impact of any termination or revocation by the Mexican government of Kansas City Southern de México, S.A. de C.V.'s Concession; public opinion; various events that could disrupt operations, including severe weather, such as droughts, floods, avalanches and earthquakes, and cybersecurity attacks, as well as security threats and governmental response to them, and technological changes; acts of terrorism, war or other acts of violence or crime or risk of such activities; insurance coverage limitations; material adverse changes in economic and industry conditions, including the availability of short and long-term financing; the pandemic created by the outbreak of COVID-19 and its variants and resulting effects on economic conditions, the demand environment for logistics requirements and energy prices, restrictions imposed by public health authorities or governments, fiscal and monetary policy responses by governments and financial institutions, and disruptions to global supply chains; the realization of anticipated benefits and synergies of the Canadian Pacific Railway Limited (CP) - Kansas City Southern (KCS) transaction and the timing thereof; the satisfaction of the conditions imposed by the U.S. Surface Transportation Board in its March 15, 2023 final decision; the success of integration plans for KCS; the focus of management time and attention on the CP-KCS transaction and other disruptions arising from the CP-KCS integration; estimated future dividends; financial strength and flexibility; debt and equity market conditions, including the ability to access capital markets on favourable terms or at all; cost of debt and equity capital; improvement in data collection and measuring systems; industry-driven changes to methodologies; and the ability of the management of CPKC to execute key priorities, including those in connection with the CP-KCS transaction. The foregoing list of factors is not exhaustive. These and other factors are detailed from time to time in reports filed by CPKC with securities regulators in Canada and the United States. Reference should be made to "Item 1A - Risk Factors" and "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Forward-Looking Statements" in CPKC's annual and interim reports on Form 10-K and 10-Q.
About CPKC
With its global headquarters in Calgary, Alta., Canada, CPKC is the first and only single-line transnational railway linking Canada, the United States and México, with unrivaled access to major ports from Vancouver to Atlantic Canada to the Gulf of México to Lázaro Cárdenas, México. Stretching approximately 20,000 route miles and employing 20,000 railroaders, CPKC provides North American customers unparalleled rail service and network reach to key markets across the continent. CPKC is growing with its customers, offering a suite of freight transportation services, logistics solutions and supply chain expertise. Visit cpkcr.com to learn more about the rail advantages of CPKC. CP-IR
About CSX
SX, based in Jacksonville, Florida, is a premier transportation company. It provides rail, intermodal and rail-to-truck transload services and solutions to customers across a broad array of markets, including energy, industrial, construction, agricultural and consumer products. For nearly 200 years, CSX has played a critical role in the nation’s economic expansion and industrial development. Its network connects every major metropolitan area in the eastern United States, where nearly two-thirds of the nation’s population resides. It also links more than 230 short-line railroads and more than 70 ocean, river and lake ports with major population centers and farming towns alike. More information about CSX Corp. and its subsidiaries is available at www.csx.com.
About Genesee & Wyoming
G&W owns or leases 115 freight railroads with 7,300 employees serving 3,000 customers. The company’s North American operations include 110 short line and regional railroads that serve 43 U.S. states and four Canadian provinces over more than 13,000 track-miles. G&W subsidiaries and joint ventures also provide rail service at more than 30 major ports, rail-ferry service between the U.S. Southeast and Mexico, transload services, and industrial railcar switching and repair. G&W is owned by Brookfield Infrastructure Partners, L.P. and GIC.
Contacts:
Media
CPKC
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CSX
Bryan Tucker
855-955-6397
G&W
Tom Ciuba
(203) 202-8926
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Investment Community
CPKC
Chris De Bruyn
403-319-3591
[email protected]
CSX
Matthew Korn
904-366-4515
