CN responded to the numerous "misleading claims and inconsistencies "in recent disclosures by CIFF Capital and TCI, which, in addition to being a shareholder of CN is the largest shareholder of Canadian Pacific (CP), CN’s direct competitor and Canada’s second largest Class 1 railroad.
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"As CN highlights below, these claims include:
"False or misleading characterizations of CN’s performance;
Inaccurate description of financial risks associated with CN’s bid for Kansas City Southern (“KCSâ€) and refusal to acknowledge that CN walked away with an incremental $700 million amongst other strategic benefits;
"Failure to provide a credible or differentiated plan; and
"Failure to acknowledge concerns over the fact that TCI is the largest shareholder of CN’s principal competitor.
“CN has announced an ambitious strategic plan to deliver immediate and long-term shareholder value, while retaining our commitment to safety, customer service and the communities we serve.
"This plan builds on the investments we have made in technology and capacity over the past three years to drive long-term sustainable growth in total revenues and operating margins.
"CN maintains an open and constructive dialogue with its shareholders, including discussions about areas where we can improve our business performance, but we will not indulge unfounded and bad-faith arguments that serve the interests of one shareholder over others – or of one of our competitors over CN. CN’s Board and senior management team are intently focused on putting forward ideas, initiatives and people that drive us forward to where CN and the railroad industry are going, not where it’s been,†said JJ Ruest, President and Chief Executive Officer of CN.
"As we will demonstrate more fully in due course, TCI’s critiques of the Company and its performance are largely false or misleading.
"This includes portraying CN’s adjusted operating income, adjusted earnings per share and free cash flow as lower in the second quarter of 2021 than they were in the second quarter of 2018. In fact, each of these metrics increased measurably when calculated on a trailing 12-month basis ending in such periods, which is much more meaningful to demonstrate trends in underlying performance.
"TCI also mischaracterizes both executive compensation and OR at CN. TCI also omits the fact that much of CN’s capital spending during this period was needed to invest in technology to enhance safety and reliability, renew CN’s locomotive fleet and build network capacity and resiliency to lay the foundations for growth in total revenues and operating margins. ■