Canadian National's Offerings of Common Shares and US$200-Million Convertible Preferred Securities are Priced

18 June 1999

Canadian National's Offerings of Common Shares and US$200-Million Convertible Preferred Securities are Priced

    MONTREAL--June 17, 1999--Canadian National Railway Company (ME:CNR.)(TSE:CNR.)(CN) announced today it has executed underwriting agreements for the concurrent sale to the public of four million Common Shares and US$200-million aggregate principal amount of Convertible Preferred Securities.
    CN's offering of common shares is priced at US$62.56 per share in the United States and C$91.45 per share in Canada.
    CN's convertible preferred securities, issued at a principal amount of US$50 per convertible preferred security, will carry an annual interest rate of 5.25 per cent, payable in U.S. dollars. Each convertible preferred security is convertible into CN common shares at a premium of 23 per cent to the closing price of the common shares on June 17, 1999, representing a conversion price of US$76.95.
    The convertible preferred securities will be subordinated debt securities of CN and have a 30-year term.
    CN has granted the underwriters, co-led by Goldman, Sachs & Co. and Nesbitt Burns Inc., options, exercisable within 30 days of the closing of the two offerings, to purchase as many as 600,000 additional common shares to cover over-allotments, if any, and an additional US$30-million aggregate principal amount of convertible preferred securities to cover over-allotments, if any.
    Net proceeds of approximately US$497 million/C$726 million from the two offerings, assuming the underwriters exercise their option for over-allotment, will be used to reduce CN's outstanding debt, giving the Company greater flexibility to finance future strategic investments and new business opportunities as they arise.
    Closing of the offerings is scheduled for June 23, 1999.
    The convertible preferred securities will be traded on the Toronto Stock Exchange (TSE), Montreal Exchange (ME) and New York Stock Exchange (NYSE) under the symbols CNR.PR.U (TSE/ME) and CNI Pr (NYSE). CN's common shares currently trade on the TSE and ME under the symbol CNR and on the NYSE under the symbol CNI.
    Canadian National operates track in eight Canadian provinces and six U.S. states, with principal routes to every major metropolitan area in Canada and to the major U.S. rail hubs of Buffalo, Detroit, Duluth/Superior, Wis., and Chicago. CN is North America's only transcontinental railroad, and Canada's largest railroad serving all five major Canadian ports on the Atlantic and Pacific oceans and the Great Lakes.
    CN has received regulatory approval in the U.S. to acquire Illinois Central Corporation (IC) and expects to commence the integration of CN and IC on July 1, 1999. IC, whose principal subsidiary is the Illinois Central Railroad Company, operates track running north-south between Chicago and the Gulf of Mexico, and east-west between Chicago, Iowa and Nebraska. IC's main north-south route reaches the major metropolitan areas of St. Louis, Memphis, New Orleans and Baton Rouge, La. IC's east-west route extends from Sioux City, Iowa, and Omaha, Neb., to Chicago.
    Copies of the prospectuses for the common share and convertible preferred securities offerings are available from the underwriters. The prospectus for the Common Shares is available from Goldman, Sachs & Co., Goldman Sachs Canada Inc., Nesbitt Burns Inc., Nesbitt Burns Securities Inc., Morgan Stanley Dean Witter, Morgan Stanley Canada Limited, ScotiaMcLeod Inc., Scotia Capital Markets (USA) Inc., Newcrest Capital Inc., Chase Securities Inc., Donaldson, Lufkin & Jenrette, PaineWebber Incorporated, RBC Dominion Securities Inc., Salomon Smith Barney Inc., TD Securities (USA) Inc., Credit Suisse First Boston Corporation and Credit Suisse First Boston Securities Canada Inc.
    The prospectus for the Convertible Preferred Securities is available from Goldman, Sachs & Co., Goldman Sachs Canada Inc., Nesbitt Burns Inc., Nesbitt Burns Securities Inc., Merrill Lynch & Co., Inc., Merrill Lynch Canada Inc., ScotiaMcLeod Inc. and Scotia Capital Markets (USA) Inc.