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CNNMoney.com – A shareholder has sued CSX Corp. (CSX) and two hedge funds over sales of CSX shares before the funds publicly disclosed plans to shake up the railroad operator’s board in a proxy fight earlier this year.
The lawsuit, filed in U.S. District Court in Manhattan on Tuesday, is seeking recovery of so-called "short-swing" profits related to sales by The Children’s Investment Fund Management LLP, or TCI; 3G Capital Partners LP and their principals between August and September 2007 on behalf of the company and its shareholders. CSX is a nominal defendant in the case.
The complaint alleges the funds or their principals purchased large numbers of shares and derivatives equivalent to CSX shares within six months of their prior share sales and at lower prices.
West Palm Beach (HedgeCo.net) – Hedge fund manager Rosseau Asset Management Ltd. and certain related parties have filed a dissident’s proxy circular (the "Dissident’s Circular") to Noront Resources Ltd., in which the hedge fund group controls over approximately 9.2% of common shares.
Rosseau asks Noront’s shareholders to vote against the re-election of the Company’s current Board of Directors and instead vote to elect a new slate of directors at the upcoming annual meeting of shareholders scheduled to be held on October 28, 2008.
During recent meetings between Rosseau and Noront’s management, the hedge fund manager indicated it wanted significant changes to Noront’s Board of Directors and some senior management.
Rosseau rejected Noront’s compromise proposal and has commenced its proxy fight with the filing of the Dissident’s Circular, saying, "Rosseau’s action is not in the best interest of shareholders. It is an opportunistic attempt, in light of extraordinary recent market conditions……Norent will respond (to the circular) shortly."
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Florida Times Union – CSX Corp.’s proxy fight with two hedge funds apparently ended Monday, after an appellate court turned down CSX’s attempt to block some of the funds’ votes for the company’s board of directors.
CSX, which had already seated two representatives of The Children’s Investment Fund Management LLP and 3G Capital Partners Ltd. on its board, said Monday it will now add two additional TCI and 3G nominees.
All four TCI-3G nominees won election to CSX’s 12-member board of directors at the company’s shareholders meeting in June. But after the votes were counted, CSX said it would only seat two of them until its court case was resolved.
On Monday, a three-judge panel of the U.S. Court of Appeals for the Second Circuit ruled against CSX, upholding a June decision by U.S. District Judge Lewis Kaplan. CSX had filed a lawsuit saying that TCI and 3G violated federal disclosure laws about their stock ownership in CSX. Kaplan agreed that the funds violated those laws, but said that did not give him the authority to block their proxy votes.
West Palm Beach (HedgeCo.net) - Harbinger Capital Management, an activist hedge fund, has accumulated a 4.9% stake in Cablevision Systems Corp, according to The Wall Street Journal.
In a regulatory filing, Harbinger said that it had bought 11.45 million of Cablevision’s Class A shares. Harbinger, now Cablevision’s fifth biggest shareholder, was not present at meetings with the company’s top executives and large investors this week, the Journal said, citing a person familiar with the meetings.
The move may have prompted CEO James Dolan to explore options. Cablevision shareholders rejected a $36.26-a-share buyout from the founding Dolan family last October. That bid was the family’s fourth attempt to take the company private.
The Dolan family owns 75% of the voting rights for Cablevision. It remains unclear what Harbinger intends to do with its holding. Harbinger isn’t currently planning a proxy fight with the company, said a person close to the company.
Cablevision last month acquired 97% of Newsday Media Group ("Newsday") through the formation of a new partnership with Tribune Company. For Cablevision, the completion of this transaction adds a complementary print and online media group with local content in the New York area.
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Bizjournals.com- CSX Corp’s board is in for a bumpy ride despite assurances from the railroad and two rival hedge funds they will work together to maximize profitability, a railroad analyst said.
"Everyone is human and the proxy fight between them has gotten ugly at times," said Lee Klaskow, a Longbow Research senior analyst.
Four out of five of the nominees put forth by The Children’s Investment Fund Management LLP and 3G Capital Partners Ltd. have been voted in by shareholders, according to the independent inspector of the election’s preliminary report. As reported, the vote is a sound defeat for CSX CEO Michael Ward and his managment group, which fought hard to convince shareholders to avoid the candidiates backed by the hedge funds.
Klaskow said the board changes won’t change day-to-day operations, but they may affect long-term ones, as the hedge-fund-nominated members will likely make more aggressive proposals.
New York (HedgeCo.Net) – CSX and dissident shareholders sounded off yesterday, as they shared their cases to an advisory firm and outlined their differing plans for the railroad operator’s future.
With a proxy fight in the future, TCI and 3G Capital, the two activist hedge funds, will have to urge shareholders to elect their proposed board of directors. Meanwhile, Michael Ward, Chairman and CEO of CSX, has different plans.
He once again pushed for shareholders to reject the hedge funds suggestions, citing their CSX’s strong stock performance in the first quarter and warning that the hedge funds were ultimately interested in a possible leveraged buyout.
TCI head Chris Hohn responded by saying, “If we were just looking to make a quick buck, we would have left CSX a long time ago.”
He went on to say that he is seeking nothing more than operational improvements as well as improvements on the board by replacing those with little or no railroad experience.
This includes placing himself on that board, along with 3G Managing Director Alexandre Behring.
The board of CSX currently has 12 seats. The hedge funds are seeking 5 of those seats and jointly nominated a minority board slate back in December.
The other three nominees are Gilbert Lamphere, who runs a private investment firm but also was a director at Canadian National Railway Co., Timothy O’Toole, Managing Director of the London Underground and Gary Wilson, a former chairman at Northwest Airlines Corp.
The board of directors will be decided by shareholders at the company’s annual meeting on June 25 in New Orleans.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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