Posts Tagged ‘TCI Fund Management’

TCI Names its Nominees for CN Board

October 7, 2021

Activist hedge fund investor TCI Fund Management said Wednesday it plans to nominate four new members of the board of directors of Canadian National next spring.

TCI, which is based in London and serves as investment manager to CN shareholders CIFF Capital UK and The Children’s Investment Master Fund, has been waging a war of words with CN management in the wake of a failed effort by CN to acquire Kansas City Southern.

TCI had opposed the merger, which was effectively shut down when the U.S. Surface Transportation Board declined to approve CN’s plan to place KCS stock into a voting trust while regulators considered the merger.

The CN director candidates TCI intends to nominate include Gilbert Lamphere, a 40-year railroad executive;  Allison Landry, currently an independent director on the board of XPO Logistics;  Rob Knight, former chief financial officer of Union Pacific; and Paul Miller, a former CN executive (1978-2011) and 33-year railroad executive.

In a news release TCI sought to refute CN’s characterizations of TCI’s criticism of the Montreal-based Class 1 railroad’s finances. CN has described some of those criticisms as “false or misleading.”

A special meeting of CN shareholders has been set for March 22, 2022.

TCI also has indicated it will seek to replace CN CEO J.J. Ruest  with Jim Vena, a former executive at CN and UP.

“The quality of the board candidates is clear and indisputable. It is therefore notable that the [CN] board has said nothing negative about the nominees but has instead chosen to attack TCI in an attempt to divert attention from the excellence of the candidates,” TCI officials said in a statement.

CN Sets Special Shareholder Meeting for March

October 5, 2021

An activist investor has succeeded in getting Canadian National to call a special meeting of stockholders to consider management changes.

The meeting has been set for March 22, 2022, by mutual agreement of CN, CIFF Capital and TCI Fund Management.

News reports from Canada indicate that a date six months from now was agreed upon because the Canadian Business Corporation Act requires that a corporation can hold a shareholder meeting on a date no longer than six months after the end of the preceding fiscal year.

Railway Age reported on its website that it learned that TCI had sought an earlier meeting and has threatened litigation over the issue.

However, that litigation would likely have played out over a six-month or longer period of time and forced all parties to incur significant legal costs.

TCI has proposed replacing CN CEO J.J. Ruest, Chairman Robert Pace and five members of the board of directors.

The hedge fund and CN management have been sparing in public over CN’s financial performance.

CN Fights Back Against TCI Claims

October 4, 2021

Canadian National is fighting back against by an activist investment firm seeking to change the railroad’s management.

TCI Fund Management  wants to replace CN CEO J.J. Ruest, Chairman Robert Pace and name five new members of the CN board of directors.

Late last week CN said TCI’s claims about CN finances are “false or misleading.” It also said TCI has yet to acknowledge that it is a leading shareholder in Canadian Pacific, one of CN’s chief competitors.

CN said TCI has yet to offer a credible plan to create value for shareholders.

 “CN has announced an ambitious strategic plan to deliver immediate and long-term shareholder value, while retaining our commitment to safety, customer service and the communities we serve. This plan builds on the investments we have made in technology and capacity over the past three years to drive long-term sustainable growth in total revenues and operating margins,”  Ruest said in a statement referencing the Full Speed Ahead plan to reduce CN’s operating ratio, cut capital spending, and increase shareholder returns through a combination of earnings growth and share buybacks.

TCI has dismissed the Full Speed Ahead plan and raised questions about whether CN management could successfully follow through on its goals.Based in London, TCI holds $4 billion in CN stock.

CN Seeking to Bolster Financial Performance

September 20, 2021

Having failed to acquire Kansas City Southern, Canadian National management is now turning its attention to fighting a challenge by an activist investor group by seeking to boost its financial performance.

CN announced Friday a plan known as “Full Speed Ahead” that will seek to cut the railroad’s operating ratio to 57 percent, slash capital spending to 17 percent of revenue and resume buying back shares of its stock.

These measures will provide $700 million in new operating revenue next year, CN said, through improved operations, volume growth, a review of its non-rail businesses, and cutting management jobs.

In the first quarter of 2021, CN posted an operating revenue of 62.5 percent. Last year the operating ratio was 65.4 percent.

In a statement, CN called a 57 percent operating ratio “optimal for a world in which customers and regulators are putting a greater emphasis than ever on expanding customer choice, service and reliability.”

An operating ratio is the percentage of revenue spent on operating expenses.

The capital budget will be $3 billion next year a decline of 25 percent of revenue in 2019.

CN has in recent weeks been attacked by the TCI Fund, a London-based firm that holds $4 billion worth of CN shares.

TCI wants to replace CN CEO J.J. Ruest, Chairman Robert Pace and four members of the CN board of directors.

In response to CN’s Full Speed Ahead plan, TCI issued a statement saying it was not impressed with the plan.

“Why wasn’t this done before? The current management lacks the credibility to execute the plan.”

TCI Managing Director Chris Hohn and partner Ben Walker said CN has underperformed on nearly every measure of productivity and efficiency.

“Revenues per [revenue ton-mile], expenses per RTM, return on capital, operating ratio and profits have all gone backwards compared to the rest of the industry. CN has lost its way and the business needs to be fixed as a matter of urgency.”

TCI is seeking to rally CN stockholders behind its plan to install new top management at CN.

Investor Seeks to Name 4 to CN Board

September 14, 2021

An activist hedge fund had requested a special meeting of the shareholders of Canadian National in an effort to shake up the board of director’s composition.

TCI Fund Management has named four individuals it will nominate for the railroad’s board of directors.

“We did not seek a proxy fight but without urgent action CN’s operational and financial performance will continue to lag its peers under a board that lacks the right railroad experience and operational expertise,” said Chris Hohn, TCI founder and managing partner in a statement.

CN said in its own statement that it knows about the TCI request but has yet to receive the formal requisition. The railroad said that once it does, it will review it and comment further.

Hohn has called for replacing CN Chairman Robert Pace and ousting CEO J.J. Ruest. He also wants CN to drop its bid to acquire Kansas City Southern.

CN is CN’s second-largest investor. It has proposed naming to the CN board Allison Landry, a former transportation analyst at Credit Suisse who is currently a board member of XPO Logistics;  Rob Knight, who was chief financial officer at Union Pacific for 15 years before retiring in 2019; Paul Miller, a Canadian Nation executive from 1978 to 2011, retiring as vice president of safety, sustainability, and network transportation;  and Gilbert Lamphere, a former CN and Illinois Central board member.

They would replace current board members Pace, Kevin Lynch, James O’Connor, and Laura Stein.

Hedge Fund Pressing Effort to Oust Top CN Management

September 4, 2021

An activist hedge fund that controls more than 5 percent of stock in Canadian National said it will press other investors to support a call to replace the railroad’s top management.

A partner in TCI Fund Management told a Toronto newspaper that his firm has been speaking with other large investors who are likewise disenchanted with CN management.

TCI began demanding the resignation of CN CEO J.J. Ruest and Chairman Robert Pace after the U.S. Surface Transportation Board rejected a plan by CN to place Kansas City Southern into a voting trust as a first step toward acquiring KCS.

Walker told the Globe and Mail that the next steps toward replacing Ruest and Pace will hinge on what other shareholders do.

TCI is the second-largest CN stockholder and also holds a large share of stock in Canadian Pacific.