LONDON, Sept. 7, 2021 /PRNewswire/ -- Long-term
shareholder TCI Fund Management Limited ("TCI") announces it has
retained Kingsdale Advisors, North
America's leading strategic shareholder advisory and
communications firm, to act as its strategic advisor and engage
with Canadian National Railway's (TSX: CNR) (NYSE: CNI) ("CN"
or the "Corporation") shareholders to achieve TCI's objectives of
halting CN's pursuit of Kansas City Southern ("KCS") and upgrading
the board of directors (the "Board") who, among other things, will
have a mandate to identify and appoint a new CEO.
Kingsdale Advisors will provide TCI with strategic advice,
assist in engaging with shareholders, and, if CN continues to act
in a manner that ignores the interest of shareholders and a proxy
fight is required, Kingsdale Advisors will lead TCI's campaign for
positive change. Kingsdale Advisors has significant experience in
the railroad industry having previously represented Bill Ackman in his successful campaign to change
the board at Canadian Pacific Railway.
"We believe CN's best days are ahead of it, provided the company
immediately withdraws from its reckless, irresponsible, and value
destructive pursuit of KCS," said Chris
Hohn, TCI Founder and Portfolio Manager. "The 'copy-cat' bid
for KCS, combined with CN's continued operational underperformance,
make the case for change compelling and clear."
"It is shocking to us that there is currently no-one on the
Board who has had any meaningful outside involvement, background or
training in the railroad industry. The bid for KCS exposed a
basic misunderstanding of the industry and the regulatory
environment. The CN Board must therefore take
full responsibility for its egregious failure of oversight in
sanctioning the bid. The Board has consistently misjudged the
Surface Transportation Board ("STB") and the predictions of the
Board have been consistently wrong. The Board now lacks all
credibility so new directors must be appointed that have more
railroad experience and expertise. The CEO should also be
replaced with a railroader that has a proven track record in order
to create a much-needed culture of operational excellence."
Mr Hohn also said, "Due to the urgency of these issues, we
expect to requisition a special meeting of CN shareholders soon to
nominate at least five new directors with a mandate to lead the
Board in the process of selecting a new world class CEO with
extensive experience of railroad operations to turn CN
around. We believe the majority of CN shareholders share our
vision and will support the actions and leadership changes we are
recommending. We encourage CN to listen to its shareholders
and engage with TCI constructively to help get CN back on
track."
TCI, through entities it manages, has been a shareholder of CN
since 2018 and currently owns more than 5% of the shares
outstanding, valued at $4 billion,
and is committed to the long-term success of CN. TCI intends
to submit a formal requisition to CN's Board in due course for the
purpose of calling a special meeting of shareholders to upgrade the
Board by electing up to five new highly qualified and experienced
nominees.
CN Shareholders Suffering from an Incompetent Board and Weak
CEO
The bid for KCS reflects poorly on CN's management and
Board because it was obvious from the beginning that the bid would
fail. It was a 'copy-cat' bid that reflected a defensive
motivation and lack of strategic thinking. The STB's new
merger rules had never been tested so committing $2 billion of fees was irresponsible. Many
other errors were made but continually arguing that parallel tracks
do not compete with each other was disingenuous and
unintelligent.
The opinion of the STB is clear: it does not want CN to buy KCS,
so persisting in the face of explicit opposition from the STB and
other government agencies would be negligent, hugely damaging to
the reputation of CN, and potentially financially disastrous
because it would expose the company to the risk of forced
divestment and damaging remedies. It would also be a major
distraction for management who should be focused on fixing the
network.
CN's Best Days Are Ahead
The good news is that CN owns
the best rail network in North
America so it does not need to acquire KCS to prosper. CN
should also be the most efficient and fastest growing railroad in
the industry, but change is needed to achieve this goal.
History has shown that with the right leadership railroads can be
fixed quickly. CN is no different. While the new Board will
have the responsibility of selecting a new CEO, TCI has identified
Jim Vena as the outstanding
candidate for the position. Mr. Vena has a proven track
record as an exceptional operator and his time at CN and Union
Pacific demonstrate that he knows how to run a railroad
successfully.
About TCI Fund Management
Founded in 2003 by
Sir Christopher Hohn, TCI is a value orientated, fundamental
investor which invests globally in strong businesses with
sustainable competitive advantages. Using a private equity
approach, TCI conducts deep fundamental research, constructively
engages with management and adopts a long-term investment horizon.
For more information on TCI and its ESG policy,
visit www.tcifund.com/ESG
About Kingsdale Advisors
With offices in Toronto and New
York, Kingsdale Advisors is the leading advisor to public
companies on all shareholder, governance, and transaction related
matters having acted on the largest and highest profile proxy
fights, transactions, and other special situations. Since 2003,
public companies across North
America have looked to the expertise of Kingsdale Advisors
to secure the success of transactions or resolutions driven by
shareholder votes. Kingsdale Advisors' multidisciplinary team
offers an array of specialized services focused on strategic and
defensive advisory, governance advisory, compensation advisory,
strategic communications, voting analytics, and creative
services.
Contacts
Ian Robertson
President, Canada
Kingsdale Advisors
Direct: 416-867-2333
Cell: 647-621-2646
Email: irobertson@kingsdaleadvisors.com
TCI Media Contacts:
ASC Advisors, New York
Steve
Bruce: Sbruce@ascadvisors.com
Taylor
Ingraham:
tingraham@ascadvisors.com
203 992 1230
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SOURCE TCI Fund Management Limited
