CN raises debt to pay acquisition loans
Canadian National Railway on Thursday issued a bond offering to raise $540 million to pay off other debts.
The company said the money will be used to pay a portion of its short-term commercial paper loans and reduce its securitized accounts receivable program that helped finance its recent acquisition of short-line operator Elgin, Joliet & Eastern Railway Co., three railway subsidiaries and the rail-freight ferry operation of the Quebec Railway Corp.
Accounts receivable financing is a way for companies to use money owed by its customers as collateral for a loan equal to a reduced value of the receivables pledged. The accounts receivable are packaged by financial brokers and sold to investors who take on the risk that the customers will pay their bills.
The new bond notes come with a 5.5 percent interest rate and mature in 2019.