Canadian Pacific Announces Cash Tender Offer for up to US$450 Million Aggregate Principal Amount of Certain of Its Outstanding Notes



    CALGARY, May 12 /CNW/ - Canadian Pacific Railway Limited (TSX/NYSE:   CP)
announced today that its wholly-owned subsidiary, Canadian Pacific Railway
Company, is commencing an offer to purchase for cash (the "Offer") up to
US$450 million aggregate principal amount of its outstanding notes including
CP's 6.25% Notes due 2011, 5.75% Notes due 2013 and 6.50% Notes due 2018. The
offer is consistent with CP's objective to enhance its capital structure and
improve its debt maturity profile.
    The terms and conditions of the Offer will be set forth in the Offer to
Purchase dated May 12, 2009 (the "Offer to Purchase") and the related Letter
of Transmittal (the "Letter of Transmittal"). The following table sets forth
the securities that are subject to the Offer and certain other terms of the
Offer:

    
    -------------------------------------------------------------------------

                                                   Full              Late
                      Princi-                      Tender            Tender
                       pal                         Offer    Early    Offer
                      Amount   Accept-   Maximum   Consid-  Tender   Consid-
             Title    Outstan-  ance     Tender    eration  Payment  eration
    CUSIP    of       ding     Priority  Amount    (Per US  (Per US  (Per US
    Number   Security (US$)    Level     (US$)      $1,000)  $1,000)  $1,000)
    -------------------------------------------------------------------------
              6.25%
              Notes
    13645RAC8 due    $400,000,000  1  $400,000,000 $1,035.00 $30.00 $1,005.00
              October
              15,
              2011

              5.75%
              Notes
    13645RAG9 due    $400,000,000  2  $400,000,000 $1,040.00 $30.00 $1,010.00
              May 15,
              2013

              6.50%
              Notes
    13645RAH7 due    $300,000,000  3   $75,000,000   $985.00 $30.00   $955.00
              May 15,
              2018
    

    All securities of a series tendered in the Offer having a higher
Acceptance Priority Level will be accepted for purchase before any tendered
securities of a series having a lower Acceptance Priority Level are accepted
for purchase. For example, all tendered securities having Acceptance Priority
Level "1" will be accepted for purchase before tendered securities having
Acceptance Priority Level "2" and Acceptance Priority Level "3", if any, may
be accepted for purchase, subject to the limitation that no more than US$450
million aggregate principal amount of Notes will be purchased.
    If there are sufficient remaining funds to purchase some, but not all, of
the securities of a series of an applicable Acceptance Priority Level, the
amount of securities purchased in that series will be prorated based on the
aggregate principal amount of securities of such series validly tendered and
not withdrawn in the Offer.
    Holders of securities that are validly tendered and not validly withdrawn
on or before 5:00 p.m., New York City time, on May 27, 2009 (the "Early Tender
Date") and accepted for purchase will receive the Full Tender Offer
Consideration specified in the table above for each $1,000 principal amount of
securities accepted for purchase. Holders of securities that are validly
tendered after 5:00 p.m., New York City time, on the Early Tender Date but on
or before 12:00 midnight, New York City time, on June 10, 2009 (the
"Expiration Date") and accepted for purchase will receive the Full Tender
Offer Consideration minus an amount in cash equal to $30 for each $1,000
principal amount of securities (the "Late Tender Offer Consideration"). In
addition to the Full Tender Offer Consideration or Late Tender Offer
Consideration, as the case may be, payable in respect of securities accepted
for purchase, Holders will receive accrued and unpaid interest on their
purchased securities from the applicable last interest payment date to, but
not including, the date of payment for purchased securities.
    Securities tendered on or before the Early Tender Date may be validly
withdrawn at any time on or before 5:00 p.m., New York City time, on the Early
Tender Date, but not thereafter, and securities tendered after the Early
Tender Date but on or before the Expiration Date may not be withdrawn,
provided, however, in each case, that if CP reduces the principal amount of,
or the consideration for, securities subject to the Offer or is otherwise
required by law to permit withdrawal, then previously tendered securities may
be validly withdrawn to the extent required by law.
    The Offer is scheduled to expire at 12:00 midnight, New York City time,
on the Expiration Date, unless extended. The Offer is not subject to the
receipt of any minimum amount of tenders but is subject to the general
conditions set forth in the Offer to Purchase.
    This press release is neither an offer to purchase, nor a solicitation
for acceptance of the offer. CP is making the offer only by, and pursuant to
the terms of, the Offer to Purchase and the related Letter of Transmittal.
    The complete terms and conditions of the Offer will be set forth in the
Offer to Purchase and Letter of Transmittal that will be sent to holders of
securities. Holders are urged to read the tender offer documents carefully
when they become available. Copies of the Offer to Purchase and Letter of
Transmittal may be obtained from the Information Agent for the Offer, Global
Bondholder Services Corporation, at (866) 470-3900 (US toll-free) and (212)
430-3774 (collect).
    J.P. Morgan Securities Inc. and Morgan Stanley & Co. Incorporated are the
Dealer Managers for the Offer. Questions regarding the Offer may be directed
to J.P. Morgan Securities Inc., Liability Management Group at (866) 834-4666
(toll-free) and (212) 834-4802 (collect) or to Morgan Stanley & Co.
Incorporated at (800) 624-1808 (toll free) or (212) 761-5384 (collect).

    About Canadian Pacific

    Canadian Pacific, through the ingenuity of its employees located across
Canada and in the United States, intends to be the safest, most fluid railway
in North America. Our people are the key to delivering innovative
transportation solutions to our customers and to ensuring the safe operation
of our trains through the more than 900 communities where we operate. Canadian
Pacific is proud to be the official rail freight services provider for the
Vancouver 2010 Olympic and Paralympic Winter Games.






For further information:

For further information: Media Contact: Leslie Pidcock, Canadian
Pacific, Tel.: (403) 319-6878, e-mail: leslie_pidcock@cpr.ca; Investment
Community: Janet Weiss, Canadian Pacific, Tel.: (403) 319-3591, e-mail:
investor@cpr.ca


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