More Unions Across North America Call on STB to Reject CN Voting Trust
Canadian Pacific Railway (CP) announced that unions, including SMART-TD, are urging the Surface Transportation Board (STB) to reject Canadian National's (CN) proposed voting trust concerning Kansas City Southern (KCS). Concerns include potential job losses and an increased debt burden for CN. Over 330 letters expressing opposition have been sent to the STB, highlighting risks to the railway industry and public interest. CP maintains that a merger with KCS is in the best interest of its stakeholders, promoting growth and competitive service in the North American rail network.
- CP claims a merger with KCS would enhance competitive service and promote growth in North America.
- A petition against CN's trust has garnered support from over 85 KCS employees, showcasing employee alignment with CP's position.
- Unions warn of significant job losses if CN's voting trust is approved, impacting employees across multiple states.
- Concerns about CN's increased debt load could negatively affect both KCS and CN employees.
SMART-TD Chair Representing Kansas City Southern Employees Highlights Negative Impacts Associated with a CN Combination
CALGARY, AB, June 28, 2021 /PRNewswire/ - Canadian Pacific Railway Limited (TSX: CP) (NYSE: CP) ("CP") announced today that unions representing railroad employees across the U.S., including SMART-Transportation Division ("SMART-TD") General Committee GCA-457 representing Kansas City Southern ("KCS") employees, have written letters urging the Surface Transportation Board ("STB") to reject Canadian National's ("CN") proposed use of a voting trust.
Many of the unions express concerns about job loss, increased CN debt load and regulatory challenges a CN/KCS transaction would face. Excerpts from the letters include:
"If the CN voting trust and proposed merger were granted approval, we fully expect significant job losses on KCS because ultimately the transaction would require either a sale or abandonment of duplicative rail lines. The consequences for SMART-TD members would be uncertain, adverse, and certainly contrary to the public interest." -- Sam Habjan, General Chairperson of SMART-Transportation Division General Committee GCA-457, representing approximately 675 trainpersons on the KCS
"The approval of the CN voting trust by the STB would be risky for the railway industry and quite possibly will negatively impact our SMART-TD members. Approval of the CN voting trust proposal would harm employees of both KCS and CN due to the amount of debt CN will carry and the real possibility that the CN transaction would fail the regulatory test in the end." -- Joint letter from Legislative Directors of SMART-Transportation Division in the states of Kansas, Missouri, Louisiana, Texas, Mississippi and Illinois
"...rejecting the CN voting trust appears to offer better options for rail shippers and we would further anticipate a pro-growth environment in both business and jobs for SMART-TD members."-- Richard Lee, General Chairperson of SMART-Transportation Division, representing 41 members in all crafts on the Central Maine & Quebec Railway
"The approval of the CN voting trust by the STB will adversely affect both our SOO and DM&E-South Engineers and Trainmen. In addition, it would probably set off a round of mergers that will harm the railway industry. Additionally it will harm employees of both the KCS and CN by saddling CN with considerable debt." -- Peter Semenek, General Chairman, Brotherhood of Locomotive Engineers and Trainman, representing 570 locomotive engineers and trainpersons on CP (DM&E and SOO)
"…railroad workers lose with CN's proposed voting trust. The consequences for our members and Union Brothers and Sisters on both sides of the border will likely be adverse and contrary to the public interest." -- Rick Raso, President, Unifor Local 101R, representing 1,500 active CP locomotive and car repair employees in Canada
Along with the letter, SMART-TD General Committee GCA-457 filed a petition signed by more than 85 KCS employees urging the STB to reject the CN voting trust. Petitions opposing the CN trust have been submitted by railway employees across North America, including locomotive engineers, conductors, dispatchers and others.
Earlier this month, the president of SMART-TD, North America's largest railroad operating union, filed an opposition letter with the STB noting potential negative impacts to SMART-TD members. The Transportation Communications Union/IAM, District Lodge 19 of the International Association of Machinists and Aerospace Workers, and the Teamsters Canada Rail Conference-MWED previously filed letters with the STB opposing the CN/KCS voting trust.
These labor organization letters are part of 330-plus letters to the STB from shippers, communities and other stakeholders expressing concern about CN or the use of a voting trust.
Public Comment Period for CN Voting Trust Ends Today
Allowing CN to close into trust would not be in the public interest because its approval would pre-judge STB review, harm competition, risk CN shifting financial burdens to shippers, and pave the way for additional U.S. rail consolidation. CN's arguments in favor of a trust amount to the claim that CN and KCS should be able to decide what is in the public interest based on which railroad is offering more money to acquire KCS – that argument elevates private interests over the public interest.
CP maintains that a CP-KCS combination is the only viable Class 1 merger that serves the best interests of customers and stakeholders, but also the continent's rail network to enable a new corridor of investment and capacity for the North American economy to grow.
For more information on the transaction and the benefits CP-KCS is expected to bring to the full range of stakeholders, visit FutureForFreight.com.
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Canadian Pacific (TSX: CP) (NYSE: CP) is a transcontinental railway in Canada and the United States with direct links to major ports on the west and east coasts. CP provides 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 www.cpr.ca to see the rail advantages of CP. CP-IR
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SOURCE Canadian Pacific
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