CN purchases RailAmerica's Alberta short lines for C$26 million

EDMONTON, Alberta--(BUSINESS WIRE)--Jan. 19, 2006--CN announced today the purchase of the Alberta short-line railways owned by RailAmerica, Inc., of Boca Raton, Fla., for C$26 million in cash. In addition, RailAmerica may receive up to C$4 million in future payments, depending on the development of new business on the acquired railways.

CN is buying the Mackenzie Northern Railway (MKNR) and the Lakeland & Waterways Railway (LWR), both located north of Edmonton, following RailAmerica's decision to divest its Alberta short lines. Also included in the transaction is the Central Western Railway (CWR), a 21-mile railway in east-central Alberta used largely for training purposes that also carries a small amount of agricultural traffic.

Except for a small part of the CWR, all of the lines connect with CN's network. CN plans to upgrade MKNR and LWR trackage to improve customer service and rail efficiencies, and to maximize the lines' potential for hauling larger volumes of oil and gas infrastructure building materials, oil sands by-products, minerals, and forest and grain products in northern Alberta.

These feeder lines are a good fit for CN's merchandise and bulk commodity businesses at a time of major energy project development in northern Alberta. Operating the LWR will strengthen CN's connection to the Alberta Oil Sands, while the MKNR component will allow CN to participate directly in the proposed natural gas pipeline projects and give the company access to modern on-line grain elevators and pulp plants.

The 600-mile MKNR runs north from Smith, Alta., located about 130 miles north of Edmonton, to Hay River, N.W.T. The LWR, which connects with CN in the Edmonton area, has 118 miles of track and extends to Boyle, Alta., where it in turn connects with the Athabasca Northern Railway. The Central Western Railway, in east central Alberta, links with CN near Drumheller, Alta.

CN began operating the rail lines today, following the close of the transaction with RailAmerica.

Together, the railways carried about 50,000 carloads of freight last year and employed roughly 130 people who today join a larger organization with a strong interest in growing traffic on these rail lines. CN will honour the existing collective agreements of the acquired railways. Integration of the properties into CN is expected to take less than six months.

For a map of the new CN lines, visit the company's website at www.cn.ca/pdf/NewAlbertaCNlines.pdf

This news release contains forward-looking statements. CN cautions that, by their nature, forward-looking statements involve risk and uncertainties and that its results could differ materially from those expressed or implied in such statements. Reference should be made to CN's most recent Form 40-F filed with the United States Securities and Exchange Commission, its Annual Information Form filed with the Canadian securities regulators, and its 2004 Annual and 2005 Quarterly Financial Statements and Management's Discussion and Analysis, for a summary of major risks.

Canadian National Railway Company spans Canada and mid-America, from the Atlantic and Pacific oceans to the Gulf of Mexico, serving the ports of Vancouver, Prince Rupert, B.C., Montreal, Halifax, New Orleans, and Mobile, Ala., and the key cities of Toronto, Buffalo, Chicago, Detroit, Duluth, Minn./Superior, Wis., Green Bay, Wis., Minneapolis/St. Paul, Memphis, St. Louis, and Jackson, Miss., with connections to all points in North America.

www.cn.ca

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