Nov. 17, 2014
Norfolk Southern and the Delaware
& Hudson propose rail line transaction to support rail service and the
economy in the Northeast
NORFOLK, VA., and CALGARY, ALBERTA
- Norfolk Southern
Corp. (NS) and
the Delaware & Hudson Railway Co. (D&H), a subsidiary of Canadian Pacific
Railway (CP) today announced a proposed
transaction under which NS would acquire 282.55 miles of D&H rail line
between Sunbury, Pa., and Schenectady, N.Y. The $217 million sale, subject to
approval by the U.S. Surface Transportation Board, would benefit customers,
competition, and jobs in the northeastern United States.
"Acquiring this portion of the
D&H provides for more efficient rail transportation system by consolidating
freight operations with a single carrier," said NS CEO Wick Moorman. "Aligning
the D&H track with Norfolk Southern's 22-state network allows us to connect
businesses in central Pennsylvania, upstate New York and New England with
domestic and international markets while enhancing the region's competitive rail
and surface transportation market."
The lines to be acquired connect
with NS' network at Sunbury, Pa., and Binghamton, N.Y., and would give NS
single-line routes from Chicago and the southeastern United States to Albany,
N.Y., and NS' recently built Mechanicville, N.Y., intermodal terminal. NS also
would gain an enhanced connection to its joint venture subsidiary Pan Am
Southern, which services New England markets. Additionally, NS would acquire
D&H's car shop in Binghamton along with other facilities along the
corridor.
(see map below)
"As we have stated in recent
months, we've been in the process of negotiating the final details for the
potential sale of the southern portion of our D&H line," said CP CEO E.
Hunter Harrison. "We are pleased to find a prospective buyer in Norfolk
Southern."
As part of the transaction, NS
would retain and modify overhead trackage rights on the line between
Schenectady, Crescent, and Mechanicville, N.Y., as well as Saratoga Springs,
N.Y. The D&H would retain local access to serve customers in Schenectady and
would maintain its access to shippers in Buffalo.
NS intends to retain its current
employees and offer employment to about 150 D&H employees currently working
in this area. Any adversely affected employees will be entitled to standard
labor protections.
"This acquisition would preserve
good-paying railroad jobs and set the stage for economic growth," said John
Friedmann, NS vice president of strategic planning. "Absent this transaction and
its efficiencies, we are concerned that rail service along much of New York's
Southern Tier would be threatened with losing a crucial link to New
England."
NS has submitted an application
for the transaction to the U.S. Surface Transportation Board. The rail companies
are proposing a schedule that would lead to approval during the second quarter
of 2015.
Norfolk Southern
Corporation (NYSE: NSC) is one
of the nation's premier transportation companies. Its Norfolk Southern Railway
Company subsidiary operates approximately 20,000 route miles in 22 states and
the District of Columbia, serves every major container port in the eastern
United States, and provides efficient connections to other rail carriers.
Norfolk Southern operates the most extensive intermodal network in the East and
is a major transporter of coal, automotive, and industrial products.
Canadian Pacific (TSX:CP)(NYSE:CP)
is a transcontinental railway in Canada and the United States with direct links
to eight major ports, including Vancouver and Montreal, providing North American
customers a competitive rail service with access to key markets in every corner
of the globe. CP is growing with its customers, offering a suite of freight
transportation services, logistics solutions and supply chain expertise. Visit
cpr.ca to see the rail advantages of Canadian Pacific.
This
news release contains certain "forward-looking statements" within the meaning of
applicable securities laws relating, but not limited, to NS' proposed
acquisition of a portion of D&H's rail line, CP's and NS' operations,
priorities and plans, anticipated financial performance, business prospects,
planned capital expenditures, programs and strategies. These forward-looking
statements also include, but are not limited to, statements concerning
expectations, beliefs, plans, goals, objectives, assumptions and statements
about possible future events, conditions, and results of operations or
performance. Forward-looking statements may contain statements with words such
as "anticipate", "believe", "expect", "plan" or similar words suggesting future
outcomes.
Undue
reliance should not be placed on forward-looking statements as actual results
may differ materially from the forward-looking statements. Forward-looking
statements are not a guarantee of future performance. Among other risks, there
can be no guarantee that the acquisition will be completed within the
anticipated time frame or at all or that the expected benefits of the
acquisition will be realized. By their nature, CP's and NS' forward-looking
statements involve numerous assumptions, inherent risks and uncertainties that
could cause actual results to differ materially from the forward-looking
statements, including but not limited to the following factors: the occurrence
of any event, change or other circumstances that could give rise to the
termination of the agreement between CP and NS; the outcome of any legal
proceedings that may be instituted against CP or NS and others following
announcement of this agreement; the inability to complete the acquisition due to
the failure to satisfy the conditions to the acquisition; risks that the
proposed transaction disrupts current plans and operations; the ability to
recognize the benefits of the acquisition; legislative, regulatory and economic
developments, including regulation of rates; changes in business strategies;
general North American and global economic, credit and business conditions;
risks in agricultural production such as weather conditions and insect
populations; the availability and price of energy commodities; the effects of
competition and pricing pressures; industry capacity; shifts in market demand;
inflation; changes in taxes and tax rates; potential increases in maintenance
and operating costs; labor disputes and potential difficulties in employee
retention as a result of the acquisition; risks and liabilities arising from
derailments; transportation of dangerous goods; timing of completion of capital
and maintenance projects; currency and interest rate fluctuations; effects of
changes in market conditions; various events that could disrupt operations,
including severe weather, droughts, floods, avalanches and earthquakes as well
as security threats and governmental responses thereto, and technological
changes. The foregoing list of factors is not exhaustive.
These
and/or other factors are detailed from time to time in reports filed by CP with
securities regulators in Canada and the United States and in reports filed by NS
with the SEC. Reference should be made to "Management's Discussion and
Analysis" in CP's annual and interim reports, Annual Information Form and Form
40-F. Reference should also be made to NS' Annual Report on Form 10-K for the
year ended December 31, 2013. Readers are cautioned not to place undue reliance
on forward-looking statements. Forward-looking statements are based on current
expectations, estimates and projections and it is possible that predictions,
forecasts, projections, and other forms of forward-looking statements will not
be achieved by CP or NS or will be delayed or materially altered. Except as
required by law, CP and NS undertake no obligation to update publicly or
otherwise revise any forward-looking statements, whether as a result of new
information, future events or otherwise.
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Norfolk Southern
contacts:
CP
Contacts:
For the CP version of this announcement, please see the following web site: