CP: Debt Offerings for CPKC Transaction

In two separate offerings, one in Canada, one in the United States, Canadian Pacific (CP) is issuing several billion dollars in debt to “indirectly fund, in part, the cash consideration required for the acquisition of common and preferred stock of Kansas City Southern (KCS) in connection with the CP-KCS transaction to create Canadian Pacific Kansas City (CPKC), North America’s first transnational Class I railroad.

Canadian Pacific Railway Limited’s wholly owned subsidiary, Canadian Pacific Railway Company (CP), is issuing C$2.2 billion: C$1.0 billion of 1.589% Notes due 2023 and C$1.2 billion of 2.540% Notes due 2028, which will be guaranteed by CP (the “Canadian offering”).

The Canadian offering is expected to close on Nov. 24, 2021, subject to the satisfaction of customary closing conditions. The net proceeds from the Canadian offering will be used to indirectly fund in part the cash consideration required for the acquisition of common stock and preferred stock of KCS. 

The joint active bookrunners of the Canadian offering are BMO Nesbitt Burns Inc. and Goldman Sachs Canada Inc., together with a syndicate that includes ATB Capital Markets Inc., Barclays Capital Canada Inc., CIBC World Markets Inc., Desjardins Securities Inc., HSBC Securities (Canada) Inc., MUFG Securities (Canada), Ltd., Scotia Capital Inc., SMBC Nikko Securities Canada, Ltd. and Wells Fargo Securities Canada, Ltd.

The Canadian offering is being made in Canada under CP’s base shelf prospectus dated June 28, 2021, as supplemented by the prospectus supplement in respect of the Canadian offering. These securities, CP noted, “have not been registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States or to U.S. persons without registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act of 1933 and applicable securities laws.

Concurrently, CP is issuing US$6.7 billion aggregate principal amount of notes, which also will be guaranteed by CP, pursuant to a shelf registration statement filed with the Securities and Exchange Commission (SEC). The offering consists of US$1.5 billion of 1.350% Notes due 2024, US$1.0 billion of 1.750% Notes due 2026, US$1.4 billion of 2.450% Notes due 2031, US$1.0 billion of 3.000% Notes due 2041 and US$1.8 billion of 3.100% Notes due 2051, which will be guaranteed by CP (the “U.S. offering”).

The U.S. offering is expected to close on Dec. 2, 2021, subject to the satisfaction of customary closing conditions. The net proceeds from the U.S. offering will be used to indirectly fund in part the cash consideration required for the acquisition of KCS common stock and preferred stock.

The joint active bookrunners of the U.S. offering are BMO Capital Markets Corp. and Goldman Sachs & Co. LLC., together with a syndicate that includes ATB Capital Markets Inc., Barclays Capital Inc., CIBC World Markets Corp., Desjardins Securities Inc., HSBC Securities (USA) Inc., MUFG Securities Americas Inc., Scotia Capital (USA) Inc., SMBC Nikko Securities America, Inc. and Wells Fargo Securities, LLC.

The U.S. offering, CP said, “is being made pursuant to an effective shelf registration statement previously filed with the SEC. Copies of these documents may be obtained without charge from the SEC at www.sec.gov. Alternatively, investors may request copies of the prospectus supplement and the accompanying prospectus for the U.S. offering by contacting BMO Capital Markets Corp., Attn: Debt Capital Markets desk c/o Legal Department, 151 West 42nd Street, New York, New York 10036 and Goldman Sachs & Co. LLC, Attn: Registration Department, 200 West Street, New York, New York 10282.

There not be any sale of these securities, in Canada or in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Under the terms of the U.S. offering, the underwriters have agreed not to offer or sell the securities sold in the U.S. offering in Canada or to any resident of Canada.