TCI and 3G Capital Send Letter to CSX Board of Directors

The Children’s Investment Fund Management (UK) LLP (“TCI”) and 3G Capital Partners, Ltd. (“3G”) today sent the following letter to the Board of Directors of CSX Corp. (NYSE: CSX):

We are writing to reiterate our desire to work constructively with the Board of Directors for the benefit of all CSX shareholders. Accordingly, we are deeply dismayed that the Company continues to go to extraordinary lengths to thwart the clear choice made by CSX shareholders to elect four of our nominees to the Board of Directors.

It was clear to us, as we announced on the day of the annual meeting, that shareholders had elected four of our nominees. After several weeks of work conducted by the independent inspector of elections (chosen and retained by CSX), the independent inspector came to the same conclusion, as CSX announced last week. After a further five consecutive days of continuous review conducted by CSX’s lawyers and proxy advisor, while there have been de minimis changes to the vote totals, the inspector’s updated tallies have confirmed that the outcome of the election has not changed – CSX shareholders elected four of our nominees.

Today is the sixth day of review, and we are told that CSX is still seeking to find up to 122,229 “lost votes” despite the fact that this number of votes would not change the outcome of the election. Further, CSX has not told us how many more days of review it wants. However, during this same review period (the past five days) our advisors already have reviewed all votes cast by shareholders at the annual meeting. Based on this review, we see no legitimate challenges to the tally that could possibly change the previously reported outcome of the election. However, in case CSX does wish to question the tally, we are prepared to immediately begin a challenge period, which is the final step before the election results can be certified. But CSX has declined our offer to do this. The implication is that the certification of the vote and seating of our duly elected directors will not occur as scheduled this Friday, July 25th, but rather is being delayed even further.

Our concern over CSX’s unwillingness to accept and respect the expressed will of its shareholders is heightened by comments made by CSX’s legal advisors (to us) and Michael Ward (publicly) that CSX may not seat some of our directors until the litigation appeal process has concluded, which likely will not be before September at the earliest.

We do not understand how repeatedly seeking judicial “sterilization” of our shares is in the best interest of shareholders. Further we do not understand how CSX can justify not seating legitimately elected directors on this basis. The shareholders have the right to elect the directors, and the law mandates elected directors are seated upon certification. These are not choices or judgments to be made by the incumbent board. For CSX to unilaterally take the very action that two courts on three occasions have denied it, and refuse to seat elected directors, would be an affront to all shareholders, and illegal.

We urge CSX to refrain from taking further steps to delay the inevitable outcome of this election. The shareholders have decided which directors they want to represent their interests. The votes have been counted and the outcome is clear – the shareholders want our four nominees on the CSX Board. We don’t want to litigate this issue but will take all necessary actions to protect shareholder interests if the duly elected board is not immediately seated.

While we understand that losing a contested election is not easy for an incumbent board to accept, it is time to put the “contest” behind us, and move forward to work together constructively on the Board. There is a lot of work to be done to make CSX the best railroad in America, and we hope you agree that is where our collective focus and resources should be guided.

Sincerely,

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. TCI 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.

Contacts:

Sard Verbinnen & Co.
George Sard / Renée Soto, 212-687-8080