Hedge fund investors plot takeover at CSX

BLET warns: Don't put profits ahead of safety

As this issue of the News goes to press, a proxy fight continues to unfold at CSX. At stake is the direction the company will take in the future if it fails to fight off efforts by a hedge fund called The Children's Investment Fund (TCI), which is seeking to capture leadership positions on the CSX Board of Directors.

BLET members who own CSX stock received in the mail a white ballot from CSX, which recommended that its slate of directors be elected. TCI sent a blue one seeking to add five handpicked nominees to the Board. BLET urged all union shareholders who received these ballots to vote in favor of CSX. Supporting the hedge fund's Board of Director nominees could have negative consequences for your job.

Hedge fund investors are typically out for only one thing - money for shareholders, sometimes at the expense of the company in which they invest. If past actions by the hedge fund are any guide, CSX employees would suffer as a result of the fund's drive to increase stock prices. TCI is on record saying that their goal of increasing shareholder returns would be achieved by disinvestment in capital improvements. In other words, no investments in track and infrastructure would lead to derailments, injuries and - in severe cases - fatalities. TCI is also on record saying they would seek to achieve their goal by aggressively introducing labor-eliminating technologies. In other words, the hedge fund would try to make money for its investors by eliminating your job.

For example, the Florida Times-Union newspaper reported on August 12, 2007, that pressure from TCI led to the breakup and sale of the Dutch banking firm ABN Amro, which at the time had offices all over the world. While TCI made money for its investors, the fallout caused 550 ABN Amro workers to lose their jobs in Jacksonville, Fla. The Times-Union reported that hedge funds like TCI "often look to break up companies they own and sell the pieces, cashing out as the profits from the sale are distributed to shareholders. Another strategy: pressuring management to take cash a company had been planning to use for other purposes and instead distributing it to shareholders."

Rail Labor has certainly had its differences with CSX on a variety of issues. However, the BLET supports CSX in closing the gate on TCIs "Trojan Horse" in order to better protect the welfare of the railroad and its hard working employees.

CSX shareholders voted at its annual meeting in New Orleans on June 25. As this issue went to press, CSX said the outcome of the vote was too close to call, while TCI claimed to have won four seats on the CSX Board of Directors.

 

© 2008 Brotherhood of Locomotive Engineers and Trainmen