CN Rail to raise $700 million

Trains Magazine General Discussion
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MONTREAL – Canadian National Railway Co. is raising $700 million US by issuing corporate notes and debentures to U.S. investors as part of a plan to improve the company’s finances, according to this Canadian Press report.
Canada’s largest railway announced Tuesday it will offer $250 million US of corporate notes that pay 5.8 per cent annual interest and expire in 2016. The company is also issuing $450 million US of debentures which are due in 2036 and pay 6.20 per cent interest.

CN said it expects to close the U.S. financing May 31.

The Montreal-based railway said it will use the $692 million US it expects to raise through the financing to reduce its accounts receivable securitization program and repay some outstanding commercial paper debt.

The latest debt offering is part of CN’s notice to regulators filed earlier this month to raise up to $1.5 billion US of debt securities.

Lead managers of the debt offering are Citigroup Corporate and Investment Banking and J.P. Morgan Securities Inc. Other managers are Banc of America Securities LLC, Harris Nesbitt, Scotia Capital, BNP Paribas, RBC Capital Markets, and Wachovia Securities.

(The preceding Canadian Press report was filed on Tuesday, May 23, 2006.)

http://www.utu.org/worksite/detail_news.cfm?ArticleID=28312

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Sounds like a re-financing to take advantage of an interest rate that is lower than that on the existing debt.

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Its also a hedge move against the rising Canadian Dollar and the falling US Dollar.

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That is quite a sum of money. I wonder if that is the real reason for such a target to raise in funds. I have to ask if the company is doing this for a more lucrative opportunity?

5

that must be one hell of a ‘mortgage’ payment…