TCI refutes conflict of interest claims by CN Rail over proposed exec overhaul
BNN Bloomberg
An executive at the U.K.-based hedge fund that has launched a proxy fight against CN Rail is rebutting claims of a conflict of interest between the investor and its stake in rival railroad operator CP Rail.
An executive at the U.K.-based hedge fund that has launched a proxy fight against Canadian National Railway Co. is rebutting claims of a conflict of interest between the investor and its stake in rival railroad operator Canadian Pacific Railway Ltd.
TCI Fund Management Ltd. owns a 5.2 per cent stake in CN Rail valued at US$4.3 billion and has sought a special meeting for shareholders to vote on a slate of proposed board directors it believes are better suited to handle the company's business following the railroad's failed takeover attempt of Kansas City Southern. It is also CP Rail's biggest shareholder with an 8.3 per cent stake worth about US$3.7 billion.
That's led CN Rail to claim that there is a "clear conflict" in TCI's actions to seek greater control over the company through sweeping board and management changes.
Not so, said TCI Partner Ben Walker.
"This is a non-issue because investors around the world own companies that compete with each other," Walker said in an interview. He added that TCI also owns stakes in credit rating agencies Moody's Investors Service and S&P Global Inc., while other major institutional investors may also hold stakes in Visa Inc. and MasterCard Inc. without concern.
"We think the Canadian railroad industry is extremely attractive and we own both CN and CP. However, we have a substantially bigger shareholding in Canadian National because we think the potential it has under a strong board and a world class CEO will be significant."
