CN hits back at TCI Fund Management, claiming claims are false and misleading

The Canadian National Railway Company forcefully pushed back a UK-based investor seeking changes to the railway, saying on Friday that TCI Fund Management Ltd. had made false and misleading statements and was clearly in a conflict of interest.

“We are not going to indulge in unfounded and bad faith arguments that serve the interests of one shareholder rather than others,” CN CEO Jean-Jacques Ruest said in a statement.

He said CN maintains an open and constructive dialogue with its shareholders and is open to discussions about improvements, but that it would not serve the interests of CN’s competitors.

The comments come after TCI criticized CN’s management and strategy and criticized the railroad for its risky and unsuccessful bid for Kansas City Southern.

TCI called for a special meeting of CN shareholders in mid-September to “freshen up” the railroad’s board of directors and proposed Jim Vena, former CN chief operating officer, as a potential replacement for CN. Ruest.

CN said TCI did not come up with its own credible or differentiated plan and that it was in a conflict of interest as a major shareholder of CN’s main rival, Canadian Pacific Railway Ltd.

“TCI’s motives are highly suspect,” the railroad said in the statement.

“(She) is trying to exercise effective control over CN without presenting a credible plan to create greater or lasting value.”

The Montreal-based railroad said TCI’s claims that it suffered $ 2 billion in losses due to the KCS lawsuit “have proven patently false,” noting that it earned $ 700 million in breakage fees.

“CN shareholders should question TCI’s motives for supporting CN’s closest competitor to continue the transaction, while ignoring the equally compelling rationale for CN’s interest in continuing the same transaction,” said declared the largest railway in Canada.

“CN believes the essential difference is that CP has limited long-term growth opportunities without KCS, while CN’s future as a stand-alone business is bright.”

CN expressed concern with how TCI measured the financial performance of the railway.

He also pointed out that the TCI board chairman who is asking to step down had already announced in March that he would do so because he would reach the limit of his term.

TCI managing partner Chris Hohn said in September that the fund launched the proxy battle after CN Rail’s bid for KCS showed a “fundamental misunderstanding of the rail industry.”

The often bitter battle between Canada’s two largest railroads for Kansas City Southern ensued behind the scenes for months before CP Rail and the US Railroad announced a friendly offer in March.

KCS changed its alliance a month later, declaring CN’s cash and stock offer valued at US $ 33.6 billion as superior.

However, the U.S. Railroad renewed its support for CP and its $ 31 billion offer last month after the U.S. transportation regulator denied CN’s use of a voting trust for KCS, claiming it would be bad for the competition.

This report by The Canadian Press was first published on October 1, 2021.

Companies in this story: (TSX: CNR, TSX: CP)

Ross Marowits, The Canadian Press

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