Investors in Canada’s dominant rail companies would be forgiven for having a sense of déjà vu after an activist investor that has been circling Canadian National Railway Ltd. made good on its threat to launch a proxy battle Monday.
In a release, TCI Fund Management Ltd. announced plans to formally nominate four directors to CN’s board and pinpointed the person it wants to see as CN’s next CEO. It’s shaping up to be reminiscent of one of the highest-profile, most contentious activist campaigns in Corporate Canada’s history when Bill Ackman’s Pershing Square Capital Management LP’s took a stake in Canadian Pacific Railway in 2011 and ultimately launched a proxy fight that led to a boardroom and management overhaul.
TCI said it plans to nominate former CN Vice-President of Safety Paul Miller, former Union Pacific Corp. Chief Financial Officer Rob Knight, former CN Director Gilbert Lamphere, and former Credit Suisse Transportation Analyst Allison Landry to CN’s board. It said it would seek to make room for them by removing existing directors Robert Pace (who serves as CN’s chairman), Kevin Lynch, James O’Connor, and Laura Stein.
TCI, which ranks as CN’s second-largest shareholder with a 5.2 per cent stake, said if investors elect its nominees to the board, they would then seek to replace Chief Executive Officer Jean-Jacques Ruest with rail industry veteran Jim Vena, who previously served as CN’s chief operating officer.
“CN is a great company, and it owns a unique asset – the best rail network in North America. However, the business has been underperforming for too long, so change is required. We did not seek a proxy fight, but without urgent action CN’s operational and financial performance will continue to lag its peers under a Board that lacks the right railroad experience and operational expertise,” said TCI Founder and Managing Partner Chris Hohn in a release.
The launch of the activist campaign by TCI comes two weeks after the U.S. Surface Transportation Board stymied CN’s attempt to purchase Kansas City Southern by rejecting its request for a voting trust that would be crucial to going ahead with the deal. TCI has repeatedly blasted CN’s management and board for how the takeover attempt was handled.
On Sunday, Kansas City Southern said its board formally determined that a rival takeover offer by Canadian Pacific Railway is superior, which left CN with five days to come back to the table with proposed amendments.
“I think the story has really turned for CN Rail,” said Baskin Wealth Management Chief Investment Officer Barry Schwartz, who owns CN shares for clients and personally, in an interview.
“It’s going to be sitting pretty I hope — god forbid that they up their (Kansas City Southern) bid, I think it’s over and done with. … (CN will) have a clean balance sheet and there’s going to be a proxy fight but it will be very interesting to watch and we’re not selling any shares.”
CALGARY – TC Energy Corp. has lowered the estimated cost of its Southeast Gateway pipeline project in Mexico.
It says it now expects the project to cost between US$3.9 billion and US$4.1 billion compared with its original estimate of US$4.5 billion.
The change came as the company reported a third-quarter profit attributable to common shareholders of C$1.46 billion or $1.40 per share compared with a loss of C$197 million or 19 cents per share in the same quarter last year.
Revenue for the quarter ended Sept. 30 totalled C$4.08 billion, up from C$3.94 billion in the third quarter of 2023.
TC Energy says its comparable earnings for its latest quarter amounted to C$1.03 per share compared with C$1.00 per share a year earlier.
The average analyst estimate had been for a profit of 95 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 7, 2024.
BCE Inc. reported a loss in its latest quarter as it recorded $2.11 billion in asset impairment charges, mainly related to Bell Media’s TV and radio properties.
The company says its net loss attributable to common shareholders amounted to $1.24 billion or $1.36 per share for the quarter ended Sept. 30 compared with a profit of $640 million or 70 cents per share a year earlier.
On an adjusted basis, BCE says it earned 75 cents per share in its latest quarter compared with an adjusted profit of 81 cents per share in the same quarter last year.
“Bell’s results for the third quarter demonstrate that we are disciplined in our pursuit of profitable growth in an intensely competitive environment,” BCE chief executive Mirko Bibic said in a statement.
“Our focus this quarter, and throughout 2024, has been to attract higher-margin subscribers and reduce costs to help offset short-term revenue impacts from sustained competitive pricing pressures, slow economic growth and a media advertising market that is in transition.”
Operating revenue for the quarter totalled $5.97 billion, down from $6.08 billion in its third quarter of 2023.
BCE also said it now expects its revenue for 2024 to fall about 1.5 per cent compared with earlier guidance for an increase of zero to four per cent.
The company says the change comes as it faces lower-than-anticipated wireless product revenue and sustained pressure on wireless prices.
BCE added 33,111 net postpaid mobile phone subscribers, down 76.8 per cent from the same period last year, which was the company’s second-best performance on the metric since 2010.
It says the drop was driven by higher customer churn — a measure of subscribers who cancelled their service — amid greater competitive activity and promotional offer intensity. BCE’s monthly churn rate for the category was 1.28 per cent, up from 1.1 per cent during its previous third quarter.
The company also saw 11.6 per cent fewer gross subscriber activations “due to more targeted promotional offers and mobile device discounting compared to last year.”
Bell’s wireless mobile phone average revenue per user was $58.26, down 3.4 per cent from $60.28 in the third quarter of the prior year.
This report by The Canadian Press was first published Nov. 7, 2024.
TORONTO – Canada Goose Holdings Inc. trimmed its financial guidance as it reported its second-quarter revenue fell compared with a year ago.
The luxury clothing company says revenue for the quarter ended Sept. 29 totalled $267.8 million, down from $281.1 million in the same quarter last year.
Net income attributable to shareholders amounted to $5.4 million or six cents per diluted share, up from $3.9 million or four cents per diluted share a year earlier.
On an adjusted basis, Canada Goose says it earned five cents per diluted share in its latest quarter compared with an adjusted profit of 16 cents per diluted share a year earlier.
In its outlook, Canada Goose says it now expects total revenue for its full financial year to show a low-single-digit percentage decrease to low-single-digit percentage increase compared with earlier guidance for a low-single-digit increase.
It also says it now expects its adjusted net income per diluted share to show a mid-single-digit percentage increase compared with earlier guidance for a percentage increase in the mid-teens.
This report by The Canadian Press was first published Nov. 7, 2024.
