(TCI and 3G issued the following on December 21.)
NEW YORK — The Children’s Investment Fund Management (UK) LLP (“TCI”) and 3G Capital Partners, LTD. (“3G”) today filed a Schedule 13D with the Securities and Exchange Commission disclosing that they and several individuals have formed a group (“Group”) whose members own in the aggregate 8.3% of the outstanding common shares of CSX Corporation (NYSE: CSX). The members of the Group also hold derivative securities providing economic exposure equivalent to an additional 11.8% of CSX’s outstanding shares.
The filing also disclosed that the Group intends to nominate five directors for election to the Board of Directors of CSX at its 2008 Annual Meeting of Shareholders.
The Group believes its nominees will strengthen CSX’s Board by adding strong independent directors with a shareholder orientation, a broad range of railroad and other relevant experience, and a firm commitment to improving CSX’s operating performance and corporate governance.
Christopher Hohn, Managing Partner of TCI, said, “CSX’s incumbent Board has overseen a railroad that for many years has lagged its peers on many of the key metrics of operational and financial performance. Rather than engage in a constructive dialogue with one of its largest shareholders, the CSX Board has consistently ignored our substantive concerns and failed to hold management accountable for continuing operational underperformance. Our goal is a strong CSX that can provide the returns shareholders deserve, the service shippers demand, a safety record communities can count on, and a working environment employees can be proud of. To this end, we are nominating to the Board the principals of two major shareholders and three distinguished independents with meaningful railroad experience. We are committed to working constructively with members of the Board to help improve CSX for the benefit of all of its stakeholders.”
The director nominees are:
* Christopher Hohn
Before founding TCI in 2003, Mr. Hohn spent seven years at Perry Capital and was the portfolio manager leading its European investment strategy from 1997 to 2003. Mr. Hohn has previously served on the Board of RIT Capital Partners plc, which is publicly listed on the London Stock Exchange.
Key reasons Mr. Hohn is being nominated and can add value to CSX are:
* Mr. Hohn has a long and successful track record of fundamental investing and actively maximizing value of public companies, including the Deutsche Börse Group, ABN AMRO, and Euronext N.V.
* Mr. Hohn has successfully advocated for strong corporate governance and shareholder rights in situations around the world.
* TCI owns approximately 4.2% of CSX’s outstanding shares.
Mr. Hohn received a B.S. degree in Accounting and Business Economics (1st Class Honors) from Southampton University and an M.B.A. degree (high distinction) from Harvard Business School.
* Alexandre Behring
Mr. Behring is the Managing Director of 3G, a private investment firm. Previously, he spent 10 years at GP Investments, Latin America’s largest private-equity firm, including eight years as a Partner and Member of the firm’s Investment Committee. He served for seven years as CEO of America Latina Logistica (ALL), Latin America’s largest independent railroad and logistics company, which operates more than 13,000 miles of track in Brazil and Argentina. He continues to serve on the Management Committee of ALL’s Board.
Key reasons Mr. Behring is being nominated and can add value to CSX are:
* Mr. Behring is a unique combination of a large CSX shareholder (3G owns approximately 4.1% of CSX’s outstanding shares) and an experienced, accomplished, hands-on railroad executive.
* Under his leadership, ALL’s accident rate was reduced by 86%, locomotive productivity increased at a double-digit compound annual growth rate, and its EBITDA margin improved from 6% to 42% through the third quarter 2007.
* ALL is now one of the most efficient and technologically advanced freight railroads in the world and has also been voted several times by its employees as one of the best companies to work for in Latin America.
* As a publicly traded company, ALL’s market capitalization of $6.5 billion is over 30 times the amount Mr. Behring and his partners paid for the company 10 years ago.
Mr. Behring received a B.S. degree in Electric Engineering from Pontifícia Universidade Católica and an M.B.A. degree (high distinction) from Harvard Business School. He is also a locomotive engineer.
* Gilbert Lamphere
Mr. Lamphere is the Managing Director of Lamphere Capital Management, a private investment firm. Previously, he was a Director of Canadian National Railway, Chairman of Illinois Central Railroad prior to its sale to Canadian National in 1998, and a Director of Florida East Coast Industries (a railroad and real estate company). He also participated in the acquisition, financing, and oversight of MidSouth Rail. Mr. Lamphere has served as a Director of nine other public companies, including Carlyle Industries, Inc., Cleveland-Cliffs Inc., R. P. Scherer Corporation, Global Natural Resources Corporation and Recognition International, Inc. Earlier in his career, Mr. Lamphere was a Vice President of Mergers & Acquisitions at Morgan Stanley.
Key reasons Mr. Lamphere is being nominated and can add value to CSX are:
* Mr. Lamphere has been Chairman or a director at three of the most successful and efficient railroads in North America.
* During his tenure on the Boards of Canadian National and Illinois Central, where he worked closely with Hunter Harrison, the Companies’ operating ratios improved from 76% to 64% and from over 90% to 63%, respectively.
* Mr. Lamphere is deeply knowledgeable of the best practices in railroad operations and a proven value-added railroad board director.
Mr. Lamphere received an A.B. degree in Economics from Princeton University and an M.B.A. degree (high distinction) from Harvard Business School.
* Timothy O’Toole
Mr. O’Toole has over 25 years of railroad industry experience. He is currently the Managing Director of the London Underground, where he is responsible for operating and rebuilding the Tube, the world’s oldest metropolitan railway. Previously, he served as President and Chief Executive Officer of Conrail from 1998 to 2001. During his more than 20 years at Conrail, he served in various senior management roles, including Senior Vice President of Law and Government Affairs, Senior Vice President of Finance and Chief Financial Officer, Vice President and Treasurer, and Vice President and General Counsel.
Key reasons Mr. O’Toole is being nominated and can add value to CSX are:
* Mr. O’Toole was a prominent figure in the transaction splitting the former Conrail business between CSX and Norfolk Southern, providing him with first-hand knowledge of CSX’s assets and operations.
* Under his leadership, Conrail achieved record financial results and safety performance. Similarly, under his leadership the London Underground has improved service and safety and moved record numbers of passengers, all while undergoing an historic rebuilding program.
* Mr. O’Toole was made an Honorary Commander of the British Empire in recognition of his performance following the terrorist attack on London’s transport system in 2005.
Mr. O’Toole received a B.A. degree in English Literature (Maxima Cum Laude) from LaSalle University, a J.D. degree from the University of Pittsburgh School of Law, and an Honorary Doctor of Humane Letters degree from LaSalle University.
* Gary Wilson
Mr. Wilson was a principal investor and Co-Chairman of the Board of Northwest Airlines from 1991 to 1997 and Chairman from 1997 to 2007. From 1985 to1990, he was Chief Financial Officer and a director of The Walt Disney Company and served on its Board until 2006. Prior to joining Disney, Mr. Wilson served for 11 years in senior executive positions at Marriott Corp., including Executive Vice President and Chief Financial Officer, Head of Corporate Development, and Treasurer. He is a current director of Yahoo! Inc. (NASDAQ: YHOO) and CB Richard Ellis Group Inc. (NYSE: CBG).
Key reasons Mr. Wilson is being nominated and can add value to the CSX Board are:
* Mr. Wilson has a track record – as an executive, director and investor – of leading major companies through strategic transitions and creating substantial shareholder value. He is also a strong advocate of improved corporate governance in public companies.
* Mr. Wilson successfully transitioned Marriott from an owner-operator to the more profitable and scaleable business model of a hotel management company.
* During his tenure as CFO, Disney’s market value increased significantly and Mr. Wilson expanded its hotel and theme park assets while utilizing innovative financing techniques.
* Mr. Wilson was an investor in and a director of Progress Rail, one of North America’s largest providers of railroad products and services.
Mr. Wilson received a B.A. degree from Duke University and an M.B.A. degree from The Wharton School of the University of Pennsylvania.
For further information, please visit www.strongercsx.com.
About TCI
TCI is a London-based asset manager founded in 2003 which manages The Children’s Investment Master Fund. TCI makes long-term investments in companies globally. The management company is authorized and regulated in the United Kingdom by the Financial Services Authority. The majority of TCI’s profits go to The Children’s Investment Fund Foundation, a non-profit organization focused on improving the lives of children living in poverty in developing countries.
About 3G
3G manages a private investment fund that invests in global equities and special situations. 3G Fund L.P. leverages its deep industry and operating expertise in different sectors to identify attractive, long-duration investment opportunities.