(The following story by James Quinn appeared on The Telegram website on June 11.)
LONDON — TCI’s audacious attempt to gain five seats on the 12-man board of US railroad giant CSX could be referred to the all-powerful Committee on Foreign Investment in the US (CFIUS) after a group of leading senators questioned the London-based hedge fund’s ownership structure.
The senators, all members of the Senate Banking Committee and led by New Jersey’s Robert Menendez, have written to US Treasury Secretary Henry “Hank” Paulson asking him to refer the situation to CFIUS on the grounds of national security.
“CSX is the exclusive rail provider to 13 major military bases and ocean terminals and shipped more carloads of military equipment and supplies than any other railroad last year,” the letter says. “Very little is known about the investors in the TCI Group or those investors’ agenda. They are anonymous and invisible to government regulators and the nation.”
CFIUS has had an increasingly prominent role in recent years, most famously becoming embroiled in the row over DP World’s purchase of P&O’s US port assets.
TCI, which is working with the 3G hedge fund, owns an 8.7pc stake in CSX and has financial exposure to a further 12.3pc through derivative instruments. The two funds are pressing the board of CSX to find a buyer for the business or to agree to some form of leveraged buyout, and are trying to get five nominees elected on to the board at the company’s annual meeting on June 25.
In a letter to the group of senators, TCI partner Snehal Amin stressed that its interest in CSX was economically rather than politically motivated and that “in no way could or would we compromise the national security of the US”.