F-10/A: Canadian Pacific Kansas City Seeks to Raise US$6 Billion Through Debt Securities Offering

Canadian Pacific Kansas City (CPKC) and Canadian Pacific Railway Company (CPRC) are seeking to raise up to US$6 billion through an offering of Canadian and U.S. debt securities, fully guaranteed by CPKC.

Summary

• Canadian Pacific Railway Company (CPRC) plans to offer Canadian and U.S. debt securities up to an aggregate principal amount of US$6 billion.
• These debt securities may include debentures, notes, or other types of debt issued in series.
• The debt securities will be fully and unconditionally guaranteed by Canadian Pacific Kansas City Limited (CPKC), the parent company.
• The specific terms of the debt securities will be detailed in supplements to the prospectus.
• The net proceeds from the issuance of the debt securities may be used for general corporate purposes, including repayment of indebtedness, capital expenditures, share repurchases, and other business opportunities.
• CPKC's common shares are listed on both the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE).

Sentiment

Score: 7

Explanation: The document is a standard financial prospectus, so the sentiment is neutral to positive. The company is seeking to raise capital, which suggests growth opportunities, but there are also inherent risks associated with debt financing.

Positives

• The debt securities are guaranteed by CPKC, providing an additional layer of security for investors.
• The potential use of proceeds for debt repayment could improve the company's financial stability.
• CPKC's extensive rail network across North America positions it well for future growth.

Negatives

• The debt securities are structurally subordinated to the liabilities of CPRC's and CPKC's subsidiaries.
• There is no assurance of a liquid trading market for the debt securities.
• The offering is subject to various risk factors, including changes in interest rates and foreign currency fluctuations.

Risks

• The debt securities are structurally subordinated to the liabilities of CPRC's and CPKC's subsidiaries, meaning that claims of creditors of those subsidiaries will be paid before claims of the debt security holders.
• There is no assurance that an active trading market for the debt securities will develop, which could affect their liquidity and market price.
• Changes in interest rates could negatively impact the market value of the debt securities.
• Debt securities denominated in foreign currencies are subject to foreign currency risk, including fluctuations in exchange rates and potential illiquidity.
• The company's business is subject to various risks, including economic conditions, competition, and regulatory changes, as detailed in the 2024 Annual Report on Form 10-K.

Future Outlook

The company anticipates that cash flow from operations and various sources of financing will be sufficient to meet debt repayments and obligations in the foreseeable future and concerning anticipated capital programs, statements regarding future payments including income taxes, statements regarding CPKCs greenhouse gas emissions targets, environmental-, climateor other sustainability-related strategies and initiatives and other information regarding environmental-, climateor other sustainability-related actions CPKC plans to take in the future.

Industry Context

This debt offering reflects ongoing capital market activities within the railway industry, where companies often raise funds for infrastructure development, debt refinancing, and general corporate purposes. CPKC's unique position as the only railway spanning Canada, the United States, and Mexico gives it a competitive advantage in facilitating North American trade.

Comparison to Industry Standards

• Other Class I railroads, such as Union Pacific (UNP) and Norfolk Southern (NSC), frequently utilize debt financing to fund capital expenditures and acquisitions.
• The size of this offering, US$6 billion, is comparable to other major debt issuances in the transportation sector.
• The debt ratings assigned to these securities will be benchmarked against those of peer companies to assess the relative creditworthiness of CPKC.

Stakeholder Impact

• Shareholders may be affected by the potential dilution from share repurchases or the impact of increased debt on the company's financial performance.
• Employees may benefit from the company's ability to invest in capital expenditures and growth opportunities.
• Customers may see improved service and infrastructure as a result of the company's investments.
• Creditors will be affected by the issuance of new debt and the company's ability to repay its obligations.

Next Steps

• The company will file prospectus supplements detailing the specific terms of each series of debt securities offered.
• The debt securities will be offered and sold in accordance with applicable securities laws in Canada and the United States.
• The company will use the net proceeds from the offering for general corporate purposes, as detailed in the prospectus supplement.

Key Dates

Keywords

debt securities, Canadian Pacific Kansas City, CPKC, Canadian Pacific Railway Company, CPRC, debt offering, railway, North America, guarantee, bonds