CP 8760 heads a potash train during winter operations - Date unknown Canadian Pacific Railway.

1 December 2011

Activist Investor Ackman Seeks Changes at Top of CP

Washington District of Columbia USA - New York activist Bill Ackman is pushing for strategic, executive and board changes at Canadian Pacific Railway Ltd., says a new regulatory statement.
 
According to an amended 13D document filed Thursday with the U.S. Securities and Exchange Commission, Mr. Ackman's hedge fund Pershing Square Capital Management LP specified for the first time publicly that it is seeking major changes at Canada's second-largest railway.
 
The document said Pershing Square is in "ongoing discussions" with CP officials about changes to the company's business, operations, and "its executive management and its board composition."
 
Pershing Square said it believes "discussions have been productive to date, but there is no assurance that [CP] will adopt any of the suggestions."
 
Mr. Ackman initiated discussions with CP's board of directors after the fund announced in late October that it had become CP's largest shareholder. Pershing Square has paid US$1.2-billion for a 12.4 percent stake in the railway.
 
Calgary-based CP has struggled for years to catch up with bigger North American competitors such as Canadian National Railway Co. and Union Pacific Corp., which oversee larger track networks and have invested significantly in modernizing their trains and infrastructure.
 
Although he has declined to speak about his plans for CP, Mr. Ackman typically seeks to turn around undervalued companies by working with directors to improve management, recruit new executives, and sell non-core assets.
 
On two occasions, Mr. Ackman has launched proxy battles to seek shareholder support for new company directors.
 
CP said it had no response Thursday to what it called a "private shareholder matter." It has declined to comment on Pershing's previous moves.
 
Earlier this week, CP announced plans to reduce its estimated $673-million pension solvency deficit by borrowing more than $625-million through debt markets in the United States and Canada.
 
The railway has also defended itself against criticisms about its operations, saying it has an efficiency plan in place to increase train speeds and reduce the amount of time that goods are left at terminals.
 
On Thursday, CP said it signed a pact on track rights with Iowa Northern Railway Co. "The agreement expands CP's market reach in Iowa and increases rail business options for customers' agricultural commodities," the freight carriers said in a joint release.
 
CP co-operates with nearly 100 shortlines in North America.
 
Jacquie Mcnish and Brent Jang.