(The following joint news release was issued on July 26.)
WASHINGTON D.C. — Consolidated Rail Corporation (Conrail), CSX Transportation, Inc. (CSXT) and Norfolk Southern Railway Company (NSR) today announced that they are commencing an offer to exchange new unsecured debt securities of CSXT and NSR and cash for existing unsecured debt securities of Conrail. The exchange offer is part of the restructuring of Conrail’s indebtedness as described in the parties’ joint petition filed June 4, 2003 with the Surface Transportation Board (STB). In connection with the exchange offer, Conrail also is soliciting consents from holders of its unsecured debt securities to permit the restructuring.
The exchange offer and unsecured debt consent solicitation will expire at 5 p.m., New York City time, on August 23, 2004, unless extended. Under the terms of the exchange offer and unsecured debt consent solicitation, each of Conrail’s 9 3/4% Debentures due June 15, 2020 (currently $550 million outstanding) and 7 7/8% Debentures due May 15, 2043 (currently $250 million outstanding) tendered and accepted for exchange will be exchanged for new unsecured debt obligations of NSR and CSXT, each in proportion to their respective 58% and 42% ownership interests in Conrail, and a cash payment. Holders of Conrail’s Debentures who validly tender their debentures in the exchange offer and consent solicitation will be entitled to a cash payment based on each $1,000 principal amount of Debentures.
The unsecured debt securities offered in the exchange offer and consent solicitation will have economic terms, such as currency, interest rate and interest payment and maturity dates, substantially identical to those of the existing Conrail unsecured debt securities, other than the timing of the first interest payment. The new unsecured debt obligations of CSXT and NSR will have covenants and events of default substantially similar to those contained in existing indentures of CSX Corporation (CSX) and Norfolk Southern Corp. (NSC), respectively.
Conrail today also began soliciting consents relating to its outstanding equipment trust certificates and pass through trust certificates. Holders of these certificates are being asked to consent to certain proposed amendments to the agreements under which the certificates were issued. The proposed amendments would expressly permit Conrail to, among other things, transfer its 100% ownership interest in New York Central Lines LLC to CSXT and its 100% ownership interest in Pennsylvania Lines LLC to NSR.
The secured debt consent solicitation will expire at 5 p.m., New York City time, on August 23, 2004, unless extended. Subject to certain conditions, including receipt of the requisite consents, Conrail will pay a consent fee to holders of record as of July 22, 2004, who have delivered and not revoked valid consents to the proposed amendments. The consent fees are based on each $1,000 principal amount of certificates.
Morgan Stanley & Co. Incorporated is the dealer manager for the exchange offer and unsecured debt consent solicitation and is the solicitation agent for the secured debt consent solicitation.
CSX, based in Jacksonville, Fla., owns the largest rail network in the eastern United States. CSXT and its 34,000 employees provide rail transportation services over a 23,000 route-mile network in 23 states, the District of Columbia and two Canadian provinces. CSX also provides intermodal and global container terminal operations through other subsidiaries.
NSC through its NSR subsidiary operates 21,500 route miles in 22 states, the District of Columbia and Ontario, serving every major container port in the eastern United States and providing connections to western rail carriers. NSC operates an extensive intermodal network and is the nation’s largest rail carrier of automotive parts and finished vehicles.
Conrail is a principal freight railroad in the Northeastern United States, and is indirectly owned 58% by NSC and 42% by CSX.