CN Railway -- summary under Debentures

Offering

Offering of US$250,000 of 2.50% senior unsecured Notes due November 15, 2022 at a price of 99.867%, and 3.50% senior unsecured Notes due November 14, 2042, at a price of 99.43%. Under both Notes the interest is calculated and payable semi-annually.

Terms

The offered debentures are redeemable at the option of the Company at any time at the higher of (a) the present value of the remaining scheduled payment of principal and interest using the Treasury Rate plus 12.5 (2022 Notes) or 15 (2042 Notes) basis points as the discount rate and (b) par, together with accrued but unpaid interest. Upon a change of control repurchase event (defined as both a change of control and credit rating falling below investment grade), the Company is required to offer to repurchase at 101% of the amount owing. Effecting an legal defeasance or covenant defeasance requires inter alia an opinion of counsel that it will not result in the recognition of income or gain for Canadian or US income tax purposes plus, in the case of a legal defeasance, an IRS ruling.

US tax consequences

The Company will take the position that the potential change of control premium will not cause the Notes to be contingent payment debt instruments.

Canadian tax consequences

No withholding for arm's length purchasers who are not specified shareholders for thin cap purposes.