Funds Claim Early CSX Victory

The Children's Investment Fund (TCI) and 3G Capital Partners announced in a press release yesterday that based on preliminary voting results they have succeeded in electing at least four members to the CSX Corp. board of directors.

The two hedge funds, which hold a combined 20-percent voting stake in the Florida-based railroad company, have staged a proxy vote that if successful would pack the 12-member CSX board with their own nominees.

The joint press release is the latest development in a shareholder battle that has raged between CSX executives and TCI and 3G activist investors since late last year.

"CSX is last or near last among the five major North American railroads on virtually every important operational and financial metric," claimed TCI in a letter to the railway giant last October.

As the third-largest U.S. railroad, CSX has achieved dramatic growth in recent years, with its stock value tripling since 2003. According to Michael Ward, chairman, president, and chief executive of the company, "We're producing and delivering for our shareholders, and investing prudently in long-term growth."

CSX shares closed yesterday at 63.23, up 1.59 percent. The TCI/3G announcement is based on preliminary results and no official numbers have yet been posted.

CSX will release the official results on July 25.