CN and CP business news

[John Ashworth]

CN merges three US subsidiaries

Railway Gazette 03 January 2012

USA: Canadian National completed the merger of three US operating subsidiaries on December 31, with the Duluth, Missabe & Iron Range Railway and the Duluth, Winnipeg & Pacific Railway becoming part of Wisconsin Central Ltd.

'CN expects the merger will lead to operational efficiencies and service improvements through the integration of distinct workforces in and around the Twin Ports region of Duluth, Minnesota, and Superior, Wisconsin,' said Jim Vena, Senior Vice-President, CN Southern Region. 'A unified workforce will allow better management of crew staffing and more efficient and reliable rail service to customers throughout the region, including those in the Mesabi iron ore range and beyond.'


Canadian Pacific dismisses reports on CEO replacement

Tue Jan 3, 2012 1:11pm GMT

Jan 3 (Reuters) - Canadian Pacific Railway Ltd said it was still willing to continue talks with activist investor William Ackman on the company's strategy and dismissed media reports that the railroad operator was willing to consider Ackman's nomination for CEO.

Ackman wants the company to replace CEO Fred Green with Canadian National Railway's ex-chief Hunter Harrison.

Canadian Pacific had expressed concerns over Harrison's contract with Canadian National and his non-compete arrangements, the company's chairman John Cleghorn said in a letter to Ackman, filed with the U.S. Securities and Exchange Commission.

Cleghorn also said no Canadian Pacific board member "expressed enthusiasm for Mr. Harrison and requested a meeting with him."

"Indeed, no invitation has been extended by us to Mr. Harrison, either directly or via Pershing Square."

Ackman, whose hedge fund Pershing Square Capital has a 14.2 percent stake in Canadian Pacific, has raised questions about CP's poor operating performance and about its management, although earlier this month the fund said discussions with the Canadian railroad had been productive.

Shares of Canadian Pacific closed at C$69.01 on Friday on the Toronto Stock Exchange. (Reporting by Abhiram Nandakumar in Bangalore; Editing by Sriraj Kalluvila)

[John Ashworth]

CP announces C$1·2bn investment plan

18 January 2012
Railway Gazette

CANADA: Plans to invest between C$1·1bn and C$1·2bn in renewal, enhancement and expansion projects during 2012 were announced by Canadian Pacific Railway on January 17.

CP's 2012 Capital Plan focuses on strategic and targeted investments to improve service and increase network capacity, as well as funding projects offering a rapid return on investment.

CP has allocated C$800m to the replacement or renewal of existing assets, C$275m for capacity expansion, business development and productivity initiatives, and C$50m for government-mandated capital projects, principally train control.

'We are executing our accelerated multi-year investment plan, to further improve service reliability, asset velocity and operational efficiency, while expanding capacity to safely and efficiently support higher volumes', said President & CEO Fred Green. 'We are confident that the investments we are making under our 2012 Capital Plan will allow us to achieve a low 70s operating ratio in the next three years.'

[Kevin Wilson-Smith]

Hunter Harrison turned CN around - he is an exceptional CEO and manager.

An interesting story.....

Among other things he wrote 2 internal CN management books when he was was with CN. I heard about these and contacted CN - and these being internal books got an e-mail to say just this, but that they had referred the matter on.

I was somewhat bemused to within 12 hrs receive an e-mail ex Harrison saying he had instructed I be sent 2 copies free, and would I please e-mail direct if I had any questions after reading the books! I provided address details and was holding the books, couriered no less, a couple of days later.

I posted a review of the first one here....

http://www.friendsoftherail.com/phpBB2/ ... =46&t=6235

[John Ashworth]

CN Rail halts pension payments to ex-CEO Harrison

Mon Jan 23, 2012 9:02pm GMT

Jan 23 (Reuters) - Canadian National Railway (CNR.TO) said on Monday it has suspended pension and other payments to former Chief Executive Hunter Harrison as the company believes he has breached or intends to breach his contractual obligations to the railway.

CN, Canada's biggest railway, also said it has asked a U.S. district court to rule on whether suspending the payments is reasonable and lawful, and whether Harrison has breached his contract with the company.

Harrison, who retired as CN president and chief executive officer on Dec. 31, 2009, is at the center of a looming proxy battle at CN's smaller rival Canadian Pacific Railway (CP.TO).

Activist shareholder, William Ackman, whose Pershing Square Capital Management owns a 14.2 percent stake in CP and is its biggest shareholder, wants to install Harrison as CEO of CP as part of his plan to turn around the railroad.

(Reporting By Nicole Mordant; editing by Rob Wilson)


Canadian Pacific signs 10-year deal with Canpotex

Mon Jan 23, 2012 12:34pm GMT

Jan 23 (Reuters) - Canadian Pacific Railway said it signed a 10-year agreement with Canpotex Ltd to transport a large majority of shipments to the potash marketing consortium's main terminal in Vancouver, British Columbia.

CP said terms and conditions of the deal with Canpotex, which is jointly owned by fertilizer producers Potash Corp , Mosaic Co and Agrium Inc, are confidential.

The agreement improves its unit revenue, CP said in a statement.

CP, Canada's second biggest railway, is fighting a planned proxy battle with activist investor William Ackman, who wants the former chief executive of rival Canadian National Railway to take the reins at CP and more quickly improve its operating ratio.

CP, which will be Canpotex's principal Canadian railway, will also transport all Canpotex's potash shipments to Portland, Oregon, along with Union Pacific Corp.

The agreement between CP and Canpotex starts on July 1. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Sriraj Kalluvila)

[Kevin Wilson-Smith]

Sour grapes?

Fear and Loathing in the far North?

I guess at the heart of this is an Intellectual Property and Restraint of Trade Agreement. The latter are not really enforceable, the former sometimes.

What I do not understand is how they could cut the pensionp ayments - as surely this is an unrelated obligation?

Will be following this with interest to find out the rationale!

[John Ashworth]

Pershing names nominees to Canadian Pacific board

Tue Jan 24, 2012 5:52am GMT

Jan 23 (Reuters) - Canadian Pacific Railway Ltd said William Ackman's hedge fund Pershing Square Capital Management has asked to elect five of its nominees to the company's board as the proxy battle between the company and activist investor Ackman heats up.

The five nominees included Ackman, who seeks to replace CP's Chief Executive Fred Green with Canadian National Railway's ex-CEO Hunter Harrison.

The other four nominees are Gary Colter, Paul Hilal, Rebecca MacDonald and Anthony Melman, CP said in a statement.

Canadian Pacific said it will hold its annual shareholders meeting on May 17. (Reporting by Kavyanjali Kaushik in Bangalore)

[Kevin Wilson-Smith]

Railway veteran Hunter Harrison said he expects to achieve “just as dramatic a turnaround” at Canadian Pacific Railway Ltd. (CP-T70.34-1.12-1.57%) as he did at his former employer Canadian National Railway.

Mr. Harrison's remarks were made in a Pershing Square Capital Management statement issued Tuesday that outlined its proposed alternative slate of at Canadian Pacific. Mr. Ackman is pushing for new directors to support his proposal to replace CP's CEO Fred Green with Mr. Harrison, 67, who retired from CN two years ago.

The Globe and Mail

[Kevin Wilson-Smith]

Canadian National Railway Co. (CNR-T77.32-2.28-2.86%) has suspended Hunter Harrison’s pension payments, alleging that the former chief executive officer has breached provisions of his retirement deal and poses a serious threat to CN if he joins rival Canadian Pacific Railway Ltd. (CP-T70.47-0.99-1.39%)

Montreal-based CN launched legal proceedings on Monday in Illinois against Mr. Harrison, who retired from CN in 2009.

Reached at his home in Florida, Mr. Harrison said he had just been notified about the suspended payments, valued at almost $40-million (U.S.) in total, and it is “premature for me to comment at this point.”

But Mr. Harrison’s lawyer, Greg Joseph, later issued a statement to say his client had scrupulously honoured the terms of CN’s non-compete deal and the lawsuit offers no legal basis for stopping payments. “This is shocking behaviour for a reputable public company. This suit is only about money,” Mr. Joseph said.

CP CEO Fred Green has been under pressure from U.S. hedge fund Pershing Square Capital Management LP to stage a turnaround at the freight carrier, which is an industry laggard in productivity. Pershing Square CEO Bill Ackman is waging a proxy battle against CP in his quest to replace Mr. Green with Mr. Harrison.

“Harrison was intimately involved in every detail of CN’s business. Not every detail was confidential, of course, but a great many were – and still are. Under Harrison’s leadership, CN grew into a far more efficient and valuable railroad than its principal competitor, CP,” CN said its complaint in U.S. District Court. “Harrison is not the only executive who could run CP, but he is the only executive who possesses the unique body of CN confidential information, access to which by CP would be devastating.”

CN’s legal tactic provoked an extraordinary gesture from Pershing Square.

Mr. Ackman said that after consulting his lawyers, he is convinced there is so little merit to CN’s lawsuit that Pershing Square is prepared to guarantee Mr. Harrison’s retirement benefits if CN prevails with its suit.

“We will assume the risk of the $40-million. We have agreed to give Hunter an indemnity that will protect him from this frivolous litigation,” Mr. Ackman said.

Pershing Square, which is now CP’s largest shareholder, hired Mr. Harrison as a consultant last fall to help the hedge fund assess its potential investment in CP. Mr. Ackman said Mr. Harrison did not provide the fund with any information about CN.

In an interview two weeks ago, Mr. Harrison said he’s excited about the prospect of running Calgary-based CP. “I feel like I can still make a significant contribution. If the opportunity presents it itself, I am ready to go,” he said.

Mr. Harrison had a non-compete clause that expired at the end of 2011, so he believes 

he is now able to accept a job that entails competing against CN.

In its 14-page court filing, CN is seeking a declaration that it is reasonable and lawful for the railway to halt Mr. Harrison’s pension benefits with a present value of $20.6-million and restricted share units worth $17.9-million.

CN, Canada’s largest railway, asserts that based on “the strength of rumours of the mere possibility that Harrison will join CP, CP’s stock rose while numerous analysts downgraded CN.”

The court filing alleges that the former CN CEO’s consulting work in 2011 for Pershing Square constituted a breach of his non-compete provisions reached with CN and he intends to further violate non-compete restrictions by joining CP to harm CN.

“Upon his retirement, Harrison was entitled to very generous postemployment benefits, including an annual pension of $1.5-million and payments under a restricted share units agreement,” according to CN’s complaint. “CN is ready to pay those amounts, worth nearly $40-million, but it agreed to do so only in return for Harrison’s loyalty to CN and his conformance to bargained-for, reasonable non-disclosure, non-competition and non-solicitation obligations.”

Mr. Harrison served as CN’s CEO from 2003 to 2009, guiding the railway to become the industry’s most efficient train operator.

Pershing Square is proposing to elect a minority slate of alternative directors at CP: Mr. Ackman and his Pershing Square colleague Paul Hilal, corporate restructuring specialist Gary Colter, former Onex Corp. executive Anthony Melman and Just Energy Group Inc. executive chairwoman Rebecca MacDonald.

The Globe and Mail (19hours ago) http://www.theglobeandmail.com/globe-in ... le2311913/

[John Ashworth]

Canadian Pacific Railway net income falls

StockMarketWire.com 27/01/12

Canadian Pacific Railway's net income fell to $570m in 2011 - $81m, down on last time despite a $196m increase in revenues to $5.2bn.

Operating expenses rose by $345m to $4.2bn.

Net income in the fourth quarter rose to $221m - up f$35m on last time.

President and chief executive Fred Green said: "We exited 2011 having made meaningful progress on the three pillars of our multi-year plan: driving growth, expanding network capacity to safely and efficiently support higher volumes and controlling costs.

"During the fourth quarter we delivered record asset velocity, a direct link to better service, positioning us for a lower operating ratio.

"We begin 2012 with operating momentum, excellent service levels and a stronger, more resilient rail network."

[Kevin Wilson-Smith]

Exactly the same scenario as previously in CN. which I guess is why CN is now getting nervous over Harrison (who turned CN around).

This wole saga may make a good book yet!

[John Ashworth]

Canadian Pacific CEO says Ackman has no plan

Wed Feb 8, 2012 7:06pm GMT

* Green responds to activist Ackman's meeting
* Defends DM&E acquisition

Feb 8 (Reuters) - Canadian Pacific Railway Chief Executive Fred Green struck back against William Ackman on Wednesday by insisting that the activist investor has no concrete plan to make the rail operator more efficient.

Ackman's Pershing Square Capital Management wants to replace Green with former Canadian National Railway CEO Hunter Harrison. Pershing hosted a town hall-style meeting with investors and media in Toronto on Monday to build support for his proposals to shake up CP.

"Pershing Square continues to offer no plan or clear timetable for the improvement of CP's operations," Green wrote in a letter to employees obtained by Reuters.

Green argued that CP has been making progress on its own plan to boost performance.

Green also addressed Ackman's criticism of its 2008 acquisition of U.S. Class II railroad DM&E. On Monday Pershing called the deal a mistake, made at a high valuation with "irresponsible financing."

"The acquisition of the DM&E brought in a team of top-level railroaders and, most importantly, further extended the reach of CP into the U.S. Midwest, a vital part of our network," said Green. (Reporting By Allison Martell; Additional reporting by Susan Taylor)

[John Ashworth]

CP Railway asks for conciliator in labor talks

TORONTO | Fri Feb 17, 2012 8:13pm GMT

Feb 17 (Reuters) - Canadian Pacific Railway said on Friday it has asked the federal government to appoint a conciliator to assist in negotiations for a new labor deal with the union representing 4,800 train crew employees and rail traffic controllers.

CP, Canada's No. 2 railroad, said it needs to address legacy pension issues in its new contract. The move starts the clock ticking towards the possibility of a legal strike or lockout. (Reporting By Susan Taylor; editing by Rob Wilson)


CN to spend C$1.75 bln in 2012 capital plan

TORONTO | Fri Feb 17, 2012 4:15pm GMT

Feb 17 (Reuters) - Canadian National Railway said on Friday it will spend C$1.75 billion ($1.75 billion) in 2012 to maintain and upgrade its network and to drive growth and productivity initiatives.

CN said it will spend more than C$1 billion on track infrastructure, to maintain safe operations and enhance productivity. This includes spending on rail, ties, track materials and bridge improvements.

($1=$1.00 Canadian) (Reporting By Susan Taylor; Editing by Peter Galloway)

[John Ashworth]

CN targets C$1.75 billion in 2012 capital investments

Breaking Travel News 20/02/12

CN announced today plans to invest C$1.75 billion in 2012 to maintain and upgrade its railway network, support growth and productivity initiatives, and continue to provide customers with a high level of service.

Claude Mongeau, president and chief executive officer, said: “CN is taking its business model to the next level with its focus on Operational and Service Excellence. We are making major strides in improving all customer service touch points, delivering innovative products and achieving end-to-end supply chain collaboration while continually improving productivity. CN’s capital spending is critical to running a safe, fluid and productive network and to attaining our growth and service objectives.”

More than C$1 billion of CN’s 2012 capital investment program will be targeted on track infrastructure to maintain safe railway operations and to enhance the productivity and fluidity of the rail network. This includes replacement of rail, ties and other track materials and bridge improvements.

CN’s infrastructure envelope also includes funds for initiatives such as rail-line and yard improvements on the Elgin, Joliet and Eastern Railway Company that CN acquired in 2009, extended sidings along its Edmonton-Prince Rupert, B.C., corridor, and longer passing tracks in Northern Ontario.

Equipment spending, which is intended to improve the quality of the fleet and meet customer requirements, will include the acquisition of new freight cars and locomotive upgrading and is targeted to reach approximately C$150 million in 2012.

CN also expects to spend approximately C$500 million on various projects to take advantage of growth opportunities and to acquire information technology to support Operational and Service Excellence and other opportunities that enhance productivity.

Forward-Looking Statements

Certain information included in this news release constitutes “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and under Canadian securities laws. CN cautions that, by their nature, these forward-looking statements involve risks, uncertainties and assumptions. The Company cautions that its assumptions may not materialize and that current economic conditions render such assumptions, although reasonable at the time they were made, subject to greater uncertainty. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause the actual results or performance of the Company or the rail industry to be materially different from the outlook or any future results or performance implied by such statements.

Important risk factors that could affect the forward-looking statements include, but are not limited to, the effects of general economic and business conditions, industry competition, inflation, currency and interest rate fluctuations, changes in fuel prices, legislative and/or regulatory developments, compliance with environmental laws and regulations, actions by regulators, various events which could disrupt operations, including natural events such as severe weather, droughts, floods and earthquakes, labor negotiations and disruptions, environmental claims, uncertainties of investigations, proceedings or other types of claims and litigation, risks and liabilities arising from derailments, and other risks detailed from time to time in reports filed by CN with securities regulators in Canada and the United States. Reference should be made to “Management’s Discussion and Analysis” in CN’s annual and interim reports, Annual Information Form and Form 40-F filed with Canadian and U.S. securities regulators, available on CN’s website, for a summary of major risks.

CN assumes no obligation to update or revise forward-looking statements to reflect future events, changes in circumstances, or changes in beliefs, unless required by applicable Canadian securities laws. In the event CN does update any forward-looking statement, no inference should be made that CN will make additional updates with respect to that statement, related maters, or any other forward-looking statement.

CN - Canadian National Railway Company and its operating railway subsidiaries - spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key metropolitan areas of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, and Jackson, Miss., with connections to all points in North America. For more information on CN, visit the company’s website at www.cn.ca

[John Ashworth]

Pershing files CP proxy circular

TORONTO, April 5 | Thu Apr 5, 2012 2:12pm BST (Reuters) - Activist shareholder William Ackman's Pershing Square Capital Management filed its proxy circular for Canadian Pacific Railway on Thursday, arguing once more that only a new chief executive can turn around Canada's No. 2 railroad.

In an accompanying letter to shareholders, Ackman urged shareholders to vote for Pershing's seven board nominees, and against a resolution on executive compensation.

Pershing, CP's largest shareholder, wants Canadian Pacific to replace Chief Executive Fred Green with former Canadian National Railway CEO Hunter Harrison. (Reporting By Allison Martell)