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## NOTE 9 – JUNIOR SUBORDINATED DEBENTURES AND PREFERRED SECURITIES 

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The foreign exchange differential on the principal amount of the Junior Subordinated Debentures and 8.25 per cent Preferred Securities, which are Canadian Mainline financings, will be recovered through the tollmaking process. 

## Junior Subordinated Debentures 

The Junior Subordinated Debentures are redeemable at par by the Company. The Company may elect to defer interest payments on the Junior Subordinated Debentures. Interest and deferred interest, if any, are payable in cash. 

## Preferred Securities 

The US$460 million 8.25 per cent Preferred Securities are redeemable by the Company at par at any time on or after October 8, 2003, and in certain circumstances, prior to that date. The Company may elect to defer interest payments on the Preferred Securities and settle the deferred interest in either cash or common shares. 

Since the deferred interest may be settled through the issuance of common shares at the option of the Company, the Preferred Securities are classified into their respective debt and equity components. The equity component of the Preferred Securities is $675 million at December 31, 2001 (2000 – $969 million). 

On November 7, 2001, the Company redeemed the US$200 million 8.50 per cent Preferred Securities, including accrued and unpaid interest to the redemption date, without premium or penalty. 

## NOTE 10 – PREFERRED SHARES 

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The authorized number of preferred shares issuable in series is unlimited. All of the cumulative first preferred shares are without par value. 

During 2000, the Company redeemed $328 million of preferred shares. On or after October 15, 2013, for the Series U shares, and on or after March 5, 2014, for the Series Y shares, the Company may redeem the shares at $50 per share. 

## NOTE 11 – COMMON SHARES 

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