CSX Tells Investors That TCI Slate Is Bad News

May 27 2008 | 10:55am ET

U.S. railroad giant CSX Corp. is imploring its shareholders to help it fend off a pair of activist hedge funds.

CSX today sent a letter to investors asking them to disregard the proxy card sent by The Children’s Investment Fund and 3G Capital Partners. The hedge funds are backing a dissident slate of five for election to the 12-member CSX board of directors. TCI and 3G argue that the railroad is mismanaged and could achieve more than five times the annual productivity gains that CSX has targeted.

“The TCI Group tells you that it wants CSX to become the best railroad in America, while arguing to sell the company, choke it with excessive debt, freeze its expansion, alienate its customers and regulators, and lay off its workers,” CSX said in the letter.

The railroad is trying to block TCI’s slate, with a ruling expected from a federal judge before its June 25 annual meeting. CSX has also sued the hedge funds, accusing them of securities law violations. The hedge funds have countersued, accusing CSX’s board and leadership of all manner of corporate corruption and malfeasance.

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