Results of CN Rail executive search could impact service, shadow minister says

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CN Rail is currently looking for a new CEO. Normally, an executive search wouldn’t draw that much attention; however, when the position is potentially filled by someone from a shareholding hedge fund, it could impact the direction and mission of the company.

That’s according to the federal Conservatives, and Andrew Scheer, shadow minister for infrastructure and communities, is taking notes on the search. He says that whoever ends up in the role could impact service to end customers.

“What we’re concerned about is the possibility of a takeover of the board by a foreign hedge fund,” says Scheer, adding that the hedge fund in question is already a major shareholder in CP Rail. They’ve made it known that their mission is to reduce operating costs, make cuts, and try to maximize profits for shareholders.

A takeover by TCI Management, who owns 8.36 per cent of CP Rail and 5.2 per cent of CN, is concerning because it potentially means a change to service levels, which would affect Canadian farmers, says Scheer.

Would they be considered an activist hedge fund? How significant is it that the hedge fund is foreign? Scheer says that agricultural groups are using the phrase, and that TCI Management will come in with a particular timeframe, particular goal, and as seen in the past to make a quick turnover.

“For two railways, those are significant percentages of ownership, it’s definitely something that we would like to look into, what impacts on competition this will have,” says Scheer.

A reduction in operating costs would mean a reduction in service levels and in the past these types of cutbacks lead to longer delays in producers getting rail cars, delays for terminals in moving product, which has a cascading effect in agriculture, adds Scheer.

Scheer says that there is legislation in place to protect the interests of farmers and other users against disruptions to service, and steps and tools for recourse including levying fines.

Listen to the full conversation with Scheer and RealAg Radio host Shaun Haney below for more on what the next steps or asks are, before a new CEO is selected: 

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