Canadian Pacific starts exchange offer for Kansas City Southern notes

By Mary-Katherine Stinson

Lexington, Ky., March 20 – Canadian Pacific Railway Co. announced the start of exchange offers for seven series of notes previously issued by Kansas City Southern for notes to be issued by Canadian Pacific, according to a press release.

The notes will be guaranteed by Canadian Pacific Railway Ltd.

The notes subject to the exchange offer are as follows:

• $250 million 3.125% senior notes due 2026 (ISIN: US485170BA12);

• $425 million 2.875% senior notes due 2029 (ISIN: US485170BD50);

• $448,651,000 4.3% senior notes due 2043 (ISIN: US485170AQ72);

• $499,165,000 4.95% senior notes due 2045 (ISIN: US485170AS39);

• $500 million 4.7% senior notes due 2048 (ISIN: US485170BB94);

• $550 million 3.5% senior notes due 2050 (ISIN: US485170BE34); and

• $425 million 4.2% senior notes due 2069 (ISIN: US485170BC77).

In exchange for each $1,000 principal of old notes, holders will receive a total consideration of $1,000 principal amount of Canadian Pacific notes and a cash amount of $1 per $1,000 principal amount of old notes. This includes an early tender premium of $30 for those holders who exchange notes by the early deadline of 5 p.m. ET on March 31.

Holders who exchange their notes after the early participation deadline will receive $970 principal amount of Canadian Pacific notes and a cash amount of $1 per $1,000 of old notes.

Each newly issued Canadian Pacific note in a series will contain the same interest rates, interest payment dates, maturity dates and substantively the same redemption provisions as the corresponding series of old notes.

The company is also conducting a consent solicitation from holders of the old notes, on behalf of Kansas City Southern, to certain proposed amendments to the corresponding indentures governing the old notes to cause them to have fewer restrictive terms and afford reduced protection to the remaining holders of the old notes.

If the amendments become effective for any series of notes, the amendments will apply only to all notes of that series not tendered in the exchange offer.

The offers expire at 5 p.m. ET on April 17.

The new notes are expected to be issued promptly on or around the second day after the expiration date.

The dealer managers for the exchange offers are BofA Securities, Inc. (888 292-0070, 980 387-3907, debt_advisory@bofa.com), Citigroup Global Markets Inc. (800 558-3745, 212 723-6106, ny.liabilitymanagement@citi.com), Morgan Stanley & Co. LLC (800 624-1808, 212 761-1057, debt_advisory@morganstanley.com) and Wells Fargo Securities LLC (866 309-6316, 704 410-4759, liabilitymanagement@wellsfargo.com).

The exchange and information agent is Global Bondholder Services Corp. (212 430-3774, 1 866 470-3900, contact@gbsc-usa.com).

The consummation of each exchange offer is subject to the conditions described in the registration statement. Canadian Pacific may waive any conditions except the condition that Canadian Pacific is permitted to dissolve the voting trust and exercise control of Kansas City Southern and the condition that the registration statement has been declared effective by the SEC. Canadian Pacific Railway Ltd.'s exercise of control of Kansas City Southern is not conditioned upon the commencement or completion of the offers.

Canadian Pacific is a transcontinental railway based in Calgary, Alta. Canadian Pacific’s acquisition of Kansas City Southern is expected in April.

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