The Children’s Investment Fund, the London-based activist investor, is to work with another investor to nominate five new directors to the board of CSX Corporation, in its latest effort to force strategic change at the US railway company.
TCI, which is already CSX’s second-biggest investor, said that together with 3G Group, its new partner, it would own 8.3 per cent of CSX’s shares, as well as derivatives and other securities giving the pair an effective extra 11.8 per cent.
The directors the pair want elected include Christopher Hohn, TCI’s founder and managing partner; Alexandre Behring, 3G’s managing director and a former railway executive; and Tim O’Toole, managing director of London Underground.
Mr O’Toole was previously chief executive of Conrail, a US railway set up by the US federal government to rescue bankrupt operators which was eventually split up and sold partly to CSX. The other two nominees also have significant railway experience.
TCI has been struggling with CSX over its strategic direction since October, when it published an open letter criticising the corporate governance arrangements and management of CSX, one of the seven large North American Class I railways. CSX is one of only two major railways on the US’s eastern seaboard.
TCI wants the directors to replace five members of the board, which it has criticised as lacking practical railway operating knowledge.
CSX has dismissed TCI’s claims about its governance and performance, saying its governance is stronger than for most large US companies and that it has made industry-beating returns.
Mr Hohn said TCI was nominating the new directors as a step towards its goal of creating a company that would give shareholders the returns they deserved.
CSX had no immediate comment.