Electra Private Equity PLC (“Electra”) is pleased to announce it has entered into an agreement for the sale of its interest in Dakota, Minnesota & Eastern Railroad Corporation (“DM&E”) to a subsidiary of Canadian Pacific Railway Company (“Canadian”). Electra originally invested in DM&E over 20 years ago. 

DM&E operates 2500 miles of track in the Midwest USA and has been pursuing a strategy to become the third rail carrier that is needed in Wyoming’s Powder River Basin. The Powder River Basin is North America’s largest and most rapidly growing source of low-cost, low-sulphur coal as well as the largest single rail market in terms of volume.

Consideration payable to Electra and the other selling shareholders in DM&E consists of a total US $1.48 billion cash payment at closing, expected at the end of September 2007, by Canadian with future contingency payments of up to US $350 million with the start of construction on the Powder River Basin Expansion Project (“PRBEP”) and up to US $707 million if certain PRBEP coal tonnage thresholds are exceeded.

Initial net proceeds to Electra at closing are estimated, subject to exchange rate movements, to give rise to an increase in Electra’s valuation of DM&E equivalent to 26p per Electra share. This increase excludes any value attributable to the future contingency payments detailed above.

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