The battle for boardroom and C-suite control between CN and TCI Fund Management Ltd. continues to escalate. On Oct. 6, TCI responded to CN’s Oct. 4 press release with one of its own. In a largely repetitive 2,100-word tome, TCI (which consists of CIFF Capital UK LP, The Children’s Investment Master Fund and TCI Fund Management Limited) said it “reiterates the need for Board and CEO change at CN; emphasizes the qualifications of four independent, highly-skilled Director candidates; and sets the record straight on inaccurate claims from CN’s Board.”
TCI Fund Management Limited
CN on Oct. 4 announced that has scheduled a Special Meeting of Shareholders “in response to a requisition by CIFF Capital and TCI Fund Management Ltd. (collectively, TCI)” for 9:00 a.m. Eastern Time on Tuesday, March 22, 2022. TCI and CN “have mutually agreed to the date of the Special Meeting,” CN noted, adding that “the proxy contest initiated by TCI is misguided, costly and not in the best interest of CN’s shareholders or its other stakeholders.”
CN to TCI: We’ve Had Enough of Your ‘Chest Beating,’ ‘Empty Posturing’ and ‘Obvious Conflict of Interest’
The battle for control of CN’s boardroom and C Suite has heated up, morphing from light artillery to nuclear-tipped ballistic missiles. On Oct. 1—the day after Canada’s first National Day for Truth and Reconciliation—CN issued a searing statement accusing TCI Fund Management of, in simple language, lying through its teeth in its quest to chew up and spit out the current management and board. The rhetoric flying back and forth mimics the histrionics between CSX and Norfolk Southern when both railroads were headquartered in Virginia—observers quipping how the two were figuratively in hand grenade throwing range of each other, especially during their battle for control of Conrail.
A few days after throwing in the towel on its attempted merger with Kansas City Southern, and facing a board and management reorganization forced by activist investor and “beneficial owner” TCI Fund Management Ltd., CN on Sept. 17 announced its “Full Speed Ahead – Redefining Railroading” initiative, which it describes as an “ambitious value creation plan” consisting of, for full-year 2022, $5 billion in stock buybacks (a previously authorized C$1.1 billion of it to be completed by the end of January 2022), a decrease in capital investment to approximately 17% of revenues, C$700 million of additional, incremental operating income, a 57% operating ratio, and elimination of more than 1,000 jobs, 400 of them from operating crafts.
The fallout from CN’s Surface Transportation Board-forced scuttling of its attempt to merge with Kansas City Southern grew from shrapnel to a ground-zero blast the day after Canadian Pacific and KCS rekindled
RAILWAY AGE, FINANCIAL EDGE, SEPTEMBER 2021 ISSUE: For investors, industry watchers and rail consumers, August was either the most interesting or frustrating month to date in the reality dating show, “I Want to Buy a Class I Railroad.”
There’s an 800-pound British gorilla pounding on the door of CN’s boardroom. He’s pissed, beating his chest, and licking his chops. He’s not going away until he cleans house. He’s Sir Chris Hohn, and the activist hedge fund he leads, TCI Fund Management Ltd., on Aug. 30 became a “beneficial owner” of CN, grabbing 5.2% of the railroad’s shares, putting Hohn and his business partner, Ben Walker, in a position to make CN an offer it probably can’t refuse.
On Aug. 30, 2021—the day before the Surface Transportation Board rejected the voting trust for the proposed CN/Kansas City Southern merger—TCI Fund Management Ltd. filed a Schedule 13D form with the U.S. Securities and Exchange Commission to report that it had increased its stake in CN to 5.2%. TCI already is CN merger rival Canadian Pacific’s second-largest shareholder. Some industry observers found TCI’s move “interesting” and “critical” as the activist hedge fund has strongly objected to CN’s merger attempt with KCS.