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New York (HedgeCo.Net) -The much anticipated annual meeting of railroad operator CSX took an odd turn when results of Board elections were kept from the media and CSX head Michael Ward abruptly ended the meeting.
The elections were a subject of great debate, after months of pressure brought on by hedge funds TCI and 3G Capital Partners, who during a 6-month long proxy battle nominated a dissident slate for the 12-member board.
According to CSX, results weren’t readily available because they were “too close to call.” The hedge funds believed that they won at least two seats and maybe four, said Snehal Amin, founding partner of TCI. The hedge funds declared it was a “victory for all shareholders.”
"Our proxy advisors are trying to figure out with large financial institutions whether they changed their votes," Amin said, referring to the shareholders. "Hopefully not enough changed their minds to affect the outcome."
The proxy battle was sparked by the hedge funds’ desire to elect those with experience in the railroad industry to the board, something they say the current board lacks. Hedge funds like TCI and 3G are known for pushing for strategic change within companies to fuel high returns for shareholders.
Ward, who has resisted the hedge funds advances, repeated his position to the crowd gathered in New Orleans. "CSX has a disciplined management that favors building lasting shareholder value. The board sets aggressive goals and holds management accountable for achieving them."
To which Amin shared his view, “We believe CSX can and should be the best railroad in America. [Our candidates] have real railroad experience, they know the right questions to ask and have the economic incentives to do so."
CSX says the results of the vote will be announced on July 25th at the company’s headquarters in Jacksonville, Florida.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – The proxy battle waged by two hedge funds against railroad operator CSX is far from over, despite a ruling against the funds last week.
TCI, who runs the Children’s Investment Fund of Britain, and 3G Capital Partners, continue in their quest to elect 5 nominees to the board of CSX, citing lack of railroad experience among the current 12 members. The hedge funds have a combined 8.7% share in CSX.
A Manhattan court recently ruled that the two hedge funds had violated disclosure regulations, though there was nothing the judge could do to stop the funds from voting their shares at the company’s annual meeting on June 25, much to the dismay of CSX.
The ruling also stated that, “any penalties for defendants’ violations must come by way of the Securities and Exchange Commission or the Department of Justice.” CSX may appeal the decision.
The hedge funds wish to gain seats on the board in order to gain a strategic vantage point from inside the company. Funds may do this in an attempt to gain higher returns for shareholders.
“Michael Ward, the Chairman and CEO of CSX, wondered why we haven’t just taken our profits and sold our shares, much as the board and management of CSX have done over the past two years. If we believed that CSX already had achieved its full operating potential, that’s exactly what we would do. However, in our view, CSX has only just begun to improve…” said the hedge funds in a recent letter to shareholders, prompting them to send in their proxy cards.
Alexandre Behring from 3G and Chris Hohn from TCI are two of nominees looking to gain seats. The other three hopefuls are not affiliated with the funds, but have experience in the railroad industry, something that the fund’s believe is crucial to the value of the company.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
Guardian Unlimited- The Children’s Investment Fund has bought shares in two major investors in the Japanese company J-Power, weeks after its attempt to double its stake in the electricity supplier was blocked by the Japanese government.
The hedge fund – popularly known as TCI – bought minor stakes in Mizuho Financial Group, Japan’s second-biggest bank, Kajima Corp, a big construction company, and about eight other shareholders, as it exerts pressure on the management of J-Power ahead of its shareholder meeting next month.
New York Post- A looming decision in a heated lawsuit brought by railroad giant CSX Corp. could shut down a loophole used by activist hedge funds to hide their stake from the market.
CSX alleges that two big hedge funds – The Children’s Investment Fund (TCI) and 3G Capital Partners – used complex swap agreements with investment banks to secretly hide their 12 percent ownership stake in the rail operator.
TCI boss Christopher Hohn admitted in a bench trial Thursday to buying millions of dollars worth of swaps for CSX shares early last year.
Hohn, the son of working-class Jamaican parents who emigrated to London, disclosed his position in CSX last December and has launched a proxy contest to unseat five of the company’s directors.
Reuters- British investor The Children’s Investment Fund (TCI) said it had bought stakes in Mizuho Financial Group, Kajima Corp, and about eight other shareholders in J-Power, in order to raise pressure on the electricity wholesaler.
Mizuho, Japan’s second-largest bank, and Kajima, a construction company, are among the largest shareholders in J-Power, which TCI is pressuring to raise dividends, appoint outside directors and cut cross-shareholdings.
CNN Money- Two hedge funds urged shareholders of CSX Corp. on Tuesday to elect their minority slate of five board candidates, arguing that their nominees have more industry experience and a greater financial stake in the railroad operator.
The hedge funds are TCI, which manages The Children’s Investment Master Fund, and 3G Capital.
In October, TCI asked CSX’s board to separate the roles of chairman and chief executive, add new directors with railroad experience and present a plan to improve operations. In December, they jointly nominated the minority board slate.
Reuters- The chief executive of CSX Corp said in court on Wednesday he felt targeted by activist investors seeking to get seats on the board of directors, but the rail company negotiated with them in good faith to try to find common ground.
CSX sued The Children’s Investment Fund Management, a hedge fund known as TCI, and another fund, 3G Capital Partners, in March, contending they violated securities laws in their efforts to nominate a slate of directors for election at the company’s annual shareholder meeting.
The funds are trying to get five directors onto the 12-member CSX board.
