Canadian Pacific to spin off railroad, other businesses

CALGARY (Feb. 14, 2001) — Canadian Pacific Ltd., founded in 1881 to build a transcontinental railway linking eastern Canada with the Pacific coast, plans to spin off its railroad and four other businesses into five separate publicly traded companies.

The intent is to “unlock” their potential to achieve success as independent public companies, said David O’Brien, Canadian Pacific chairman.

The reorganization would provide the businesses with “direct access to public equity markets and shares that can be used as acquisition currency and incentive compensation,” he said.

Canadian Pacific said it intends to distribute its 86% share in PanCanadian Petroleum and its 100% interests in Canadian Pacific Railway, shipping company CP Ships, and the Fording coal company to holders of Canadian Pacific’s common shares. Canadian Pacific’s primary business would be managing its luxury hotel chain. Shareholders would receive new stakes in five firms.

O’Brien said he would resign after the restructuring is complete, likely in the fall if the split is approved by shareholders and the courts.

Last month, CP Ltd. reported a $1.76 billion profit for 2000, a record for the company. CP Rail, operating a network that extends from Montreal to Vancouver and into the U.S. Northeast and Midwest, accounted for profits of $523 million last year.