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CANADIAN NATIONAL COMPETITIVE REACH

WINNIPEG, Alberta--(BUSINESS WIRE)--March 19, 1998--CN(ME:CNR. - news; TSE:CNR. - news; NYSE:CNI - news) Canadian National's proposed merger with Illinois Central Corporation [NYSE:IC - news] will extend the
competitive reach of CN and IC shippers, offering them new single-line service from the Atlantic, to the Pacific and to the Gulf of Mexico, says CN President and Chief Executive Officer Paul M. Tellier.

The proposed US$2.4-billion merger is a ``perfect fit'' - an end-to-end pairing at Chicago with no overlap in networks, Tellier told the Winnipeg Chamber of Commerce today. Importantly, it will give CN the critical mass to provide shippers with ``better service and more options,'' he added.

The merger is subject to approval by the U.S. Surface Transportation Board.

Tellier stressed the merger will in no way diminish CN's commitment to its strategically important east-west network and traffic flows.

``We've invested heavily in improving the east-west flow and we will continue to do so: upgrades to our rail network and signal systems; improved tunnels and bridges; new intermodal facilities on both Atlantic and Pacific coasts. ''We move products for our customers east and west to destinations in a global economy. That trade is vital to Canada. It's vital to CN.``

Tellier said CN is making steady progress in consummating the IC merger.  The company on March 13 successfully completed a cash tender offer for 75 per cent of outstanding IC common stock.

CN will now proceed to complete a second-step merger in which the remaining 25 per cent of IC shares will be exchanged for CN shares with a value equal to the same cash price paid in the tender offer, subject to certain collar arrangements. IC has approximately 61.4 million shares outstanding, giving the transaction a total equity value of approximately US$2.4 billion.

Tellier said IC will retain its name, its logo and a significant corporate presence in Chicago.

Tellier said the rapid growth of north-south continental trade underscores the power and logic of the CN-IC combination.

``Rail traffic in the Canada-U.S.-Mexico trade corridor is growing three times faster than east-west traffic. It's part of an emerging north-south trade pattern that affects all modes of transportation.'' Between 1991 and 1996, for example, rail and truck freight from Western Canada to the U.S. grew on average by 9.3 per cent annually. Traffic in farm products increased by 20 per cent annually; food products rose by 13.2 per cent a
year, and coal by 17 per cent annually.

``We can build on this growth,'' Tellier said. ``For example, the new CN-IC network will provide Western potash and fertilizer shippers with efficient, single-line service to potash buyers in the U.S. farm belt.''

Tellier concluded: ``This is an exciting time for CN. We're building the momentum from (the company's) turnaround strategy. It will be an exciting time for Winnipeg as well. Together, we're working to build a new economy here - a knowledge economy, an economy that looks out to the world for its markets.''

Winnipeg is home to CN's technologically advanced Customer Support Centre, which acts as the single point of contact for the railway's customers throughout North America and has earned a reputation as one of the best call centres on the continent, Tellier  said.

``The Customer Support Centre and its technology show how the rail industry has changed...The railway industry is part of the new economy, driven by knowledge and innovation. Increasingly, the jobs it provides,
in Winnipeg and elsewhere, are jobs that ride the wave of technological change.''

CN's significant presence in Winnipeg is also reflected in its operations at Transcona shops, Symington Yard and also its Grain business unit.

CN employs 2,900 people in Winnipeg, with an annual payroll of $150 million. CN also pays $25 million annually in taxes to Manitoba's provincial and municipal governments.

Canadian National Railway Company is Canada's largest and North America's sixth-largest railway based on revenue. It serves all of Canada, including the key ports of Vancouver, Montreal and Halifax, and the key
gateways of Chicago and Detroit, with connections to all points in North America. -Canadian National

LONG ISLAND RAILROAD DE30AC'S HEADING EAST

Conrail train SFSE-0 was seen going through CP-SH, New York at 1853 hours.  Its engine lashup consisted of the BN 3129, LMX 8516, BN 4013, LIRR (DE30AC) 400 and 401.  Its axle count was 288 and the train speed was approximately 53MPH.  These were the first two engines produced at the Super Steel Plant in Glenville, NY and are likely returning from testing in Pueblo, CO. -Michael Christie, Mike Cole

Please check this location daily, as new information will be posted, as it becomes available. If you have news to report or information regarding railroads in the Eastern United States, please send e-mail to Kevin Burkholder at KBurkholder@psghs.edu