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CNNMoney.com - Railroad CSX Corp. said Wednesday it has settled a case of alleged securities law violations with two activist shareholder hedge funds.
If the settlement is approved by a federal court, CSX will receive $10 million from TCI, which manages The Children’s Master Investment Fund, and $1 million from 3G Capital Management.
The case, brought by a CSX shareholder, accused the hedge funds of collecting "short-swing" profits, or using insider information to nab a short-term gain. But under the settlement, the hedge funds deny any wrongdoing.
West Palm Beach (HedgeCo.net) - Transport company, CSX Corporation announced that it has joined in a civil action brought by the plaintiff, shareholder Deborah Donoghue, in federal court in New York to recover so-called "short-swing" profits under Section 16(b) of the Securities Exchange Act of 1934.
The Children’s Investment Fund and 3G Capital Partners LP are there in connection with their alleged purchases and sales of CSX securities. CSX is party to the suit in name only, which was brought for the benefit of CSX.
If approved by the court, CSX will receive $10 million from TCI and $1 million from 3G and the defendants will be released from claims of violations of Section 16(b) of the Securities Exchange Act. The settlement provides that counsel for the plaintiff will seek approval by the court for attorney’s fees and costs of up to $550,000, which will be paid from the proceeds of the settlement payable to CSX.
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New York (HedgeCo.Net) – CSX is finding themselves in the middle of another battle, this time with a shareholder who is suing the railroad company along with hedge funds TCI and 3G Capital Partners.
Shareholder Deborah Donoghue is seeking the recovery of “short swing” profits from sales conducted by the two hedge funds between August and September 2007. She is hoping to recover profits from the sale of shares by the funds, before they announced their plan to launch a proxy battle and shake up the Board of Directors.
Donoghue is claiming that TCI and 3G sold 2 million shares of CSX stock and within six months, bought a large amount of shares and derivatives equal to shares of CSX common stock at lower prices.
“Such profits are recoverable on behalf of CSX by plaintiff as a shareholder of CSX, the latter having failed or refused to act in its own right and for its own benefit,” stated the complaint.
Donoghue isn’t the only one who believes the hedge funds didn’t act in good faith. CSX has been in a battle with the two funds ever since they exerted their controlling stakes to take over four board seats on the Jacksonville, Florida based company after a drawn out proxy battle.
CSX had argued that the funds “secretly coordinated” their fight to gain the seats on the board while failing to disclose their full stake in the company. The judge eventually ruled with the hedge funds, allowing them to vote their shares at the company’s annual meeting in June.
Hedge funds are not required to report to the Securities and Exchange Commission, thus these “short-swing” profits were not publicized.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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.
New York (HedgeCo.Net) – Jacksonville-based CSX Corp’s profit fell 6.1 percent in the third quarter according to their regulatory filing yesterday, thanks to reduced freight in a sour U.S. economy. This is the first time in the last five quarters that the railroad company has seen a decrease in profit.
Net income for the third quarter totaled $382 million, down $25 million from a year ago while revenue rose 18 percent to almost $3 billion.
While per-share earnings rose from 91 to 94 cents, it is because the company had reduced the amount of outstanding stock.
CEO Michael Ward maintains a positive outlook, saying CSX has strong liquidity and plenty of access to credit.
“CSX delivered impressive financial results in a challenging economy,” Ward said in a statement. “Our resilient business portfolio and disciplined operations continue to generate substantial earnings growth for shareholders.”
The company recently made headlines for its drawn out proxy battle with hedge funds TCI and 3G Capital Partners. After reluctantly placing two representatives from the funds on the Board of Directors, an appellate court denied their attempt to withhold two more seats in September. CSX was forced to concede, giving the activist hedge funds four seats total on the Board.
Despite the loss in profit, CSX increased their operating income by 31 percent to $733 million by moderating fuel costs and a “focus on productivity and cost control.” They are predicting that full-year earnings will come out at the “low end” of the estimated $3.65 to $3.75 a share.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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.
New York (HedgeCo.Net) – Hedge fund TCI has won two more seats on the board of railroad operator CSX, in what looks to be the finale of a year-long proxy battle.
A U.S. Court of Appeals judge ruled yesterday in New York upheld an earlier ruling that the court did not have the power to stop both TCI and fellow hedge fund investor 3G Capital Partners from voting shares at CSX’s annual meeting. The ruling came despite the fact that the funds had supposedly violated certain disclosure agreements through their accumulation of equity swaps.
The June 25 shareholders meeting in Jacksonville, Florida was anything but decisive, with the head of CSX Michael Ward telling reporters that the vote was too close to call. While CSX did concede two of the seats to 3G Managing Director Alexandre Behing and Gilbert Lamphere, former head of Canadian National Railway Co., the hedge funds claimed that they had in fact won four of the 12 seats.
"It is time for the entire duly elected Board, including Chris Hohn and Tim O’Toole, to get to work and make progress on the shareholder mandate they received in June,” the hedge funds said in a statement after yesterday’s ruling.
The four new board members will be seated when the company’s annual meetings reconvene on September 24th.
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
CNBC – Hedge funds have more control over stock prices than market and business fundamentals, Cramer said yesterday during Wednesday’s show, but now it looks like at least two companies are fighting back.
Yesterday Cramer explained how massive hedge fund selling has been forcing down commodity-related stocks. It’s true that the fall of commodities themselves is partly to blame, but the rate of decline for the sector’s stocks has far outpaced that of oil, natural gas and other resources. So what’s going on? Investors in poorly performing hedge funds are demanding their money back, so the funds are dumping millions of shares into the open market to generate cash.
The trend has been enough to drive both investors in and CEOs of these commodity-related companies crazy. But today Joy Globalcnbc_comboQuoteMove(‘popup_JOYG_ID0EZE15839609′);and CSX pulled a Howard Beale, declaring they’re mad as hell and they’re not going to take it anymore. cnbc_quoteComponent_init_getData(“CSX”,”WSODQ_COMPONENT_CSX_ID0EZBAC15839609″,”WSODQ”,”true”,”ID0EZBAC15839609″,”off”,”false”);
CNBC – Cramer got a chance Thursday to check in briefly with CSX Chairman and CEO Michael Ward.
Ward’s been a regular guest on Mad Money as his company has battled with activist hedge funds fighting to have him ousted.
Those hedge funds have managed to get two people on CSX’s board of directors, and another two are pending approval based on a lawsuit that proceeds to oral hearings this coming Monday, Aug. 25 in the Second Court of Appeals in New York.
“Maybe they can actually help,” Cramer said of the board additions.
West Palm Beach (HedgeCo.Net) – Rail company CSX Corporation issued its final report, showing that four of hedge fund TCI Group’s nominees (Children’s Investment Fund Management) received a larger number of votes than four of CSX’s nominees.
"We are delighted that the certified results confirm that Alex Behring, Chris Hohn, Gil Lamphere and Tim O’Toole have all been elected to the CSX Board." The Children’s Investment Fund Management and 3G Capital Partners, said, "They bring valuable railroad and management experience to the CSX Board and look forward to working constructively with their fellow directors for the benefit of all CSX stakeholders. We thank our fellow shareholders for their patience during this lengthy process and expect all newly elected board members to be seated without further delay."
The TCI/3G proposal to repeal any recent by-law amendments, including the recent by-law limiting the right of shareholders to call a special meeting, was also approved.
CSX is appealing before the Second Circuit Court of Appeals.
New York (HedgeCo.Net) – CSX looks to be cutting some slack to the two rebel hedge funds that have been on a quest to restructure their board of directors.
The railroad company said that it will give two seats to members of the slate first proposed by TGI and 3G Capital Partners and elected during the proxy battle last month.
The seats will go to 3G Managing Director Alexandre Behing and Gilbert Lamphere, former head of Canadian National Railway Co.
However, the hedge funds are claiming they won another two seats on the board. CSX fails to recognize this victory, claiming the election was too close to call.
CSX is planning on reviewing the voting process as early as next week for both TCI head Christopher Hohn and Managing Director of the London Underground Timothy O’Toole. However, the process could take several months.
“We believe the certification process will confirm that shareholders have elected four of our nominees to the CSX board. This latest tactic should be seen for what it is—a cynical attempt to thwart the expressed will of CSX shareholders,” stated the hedge funds.
The much anticipated annual shareholder’s meeting was held at the company’s headquarters in Jacksonville, Florida on June 25th where the board of directors was set to be nominated. Reporters were disappointed when CSX head Michael Ward abruptly ended the meeting and told the public that results were not readily available.
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
Miami Herald- CSX is resuming its annual meeting in Jacksonville, but it is uncertain what will be on the agenda.
When the board met in June in New Orleans, it halted the meeting so it could continue counting votes for a slate of directors pushed by hedges fund. CSX rescheduled the meeting for Friday.
CSX said last week that preliminary results of the vote showed four of the five directors pushed by hedge funds had been elected.
But Chairman Michael Ward said the new directors cannot be seated until a court proxy battle wraps up. The hedge funds say the railroad company is stalling.
