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SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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WISCONSIN CENTRAL TRANSPORTATION CORPORATION
(Name of Registrant as Specified in its Charter)
WISCONSIN CENTRAL SHAREHOLDERS COMMITTEE TO MAXIMIZE VALUE
(Name of Person(s) Filing Proxy Statement)
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Wisconsin Central Shareholders Committee to Maximize Value
8600 West Bryn Mawr Avenue--Suite 500N
Chicago, Illinois 60631-3579
Telephone: 773-714-8669
November 29, 2000
Dear Fellow Shareholder:
Our Committee was created to reverse Wisconsin Central's decline in
performance and share price and to maximize shareholder value. In reaction to
the Committee's initiative, the Company's incumbent Board has now announced
that it intends to change course and adopt a new business strategy that looks
remarkably like the program proposed by the Committee.
The Board also disclosed that it is paying yet another fee for advice on
its new strategy to the same investment banking firm it had previously hired
to help defeat the Committee's proposals.
We believe it is clear that our Committee will be more effective in
implementing our proposals to maximize shareholder value than the Company's
incumbent Board and its advisors.
We urge you to carefully consider the following issues and then to sign,
date and return the Committee's WHITE consent card today.
. Why has the Company now purported to adopt the major parts of the
Committee's program?
In the documents the Company first filed with the SEC in late October, the
incumbent Board bitterly criticized the Committee's proposals to sell the
Company's underperforming overseas investments and to seek a strategic buyer
for the Company's domestic operation as "a naive, unworkable plan to liquidate
the Company." The Company's documents went on to say that "in the judgment of
the Board, the timing is not right for the sale of any of the Company's
domestic or international properties . . .".
Only three weeks later, by the time the Company's final documents were
mailed to shareholders, the Board's tune had changed. Our Committee believes
the Board reversed its position after one of the Company's major institutional
investors indicated its support for the Committee's proposals. I have referred
to the Board's change of heart as a "deathbed recantation."
Wisconsin Central shareholders should ask themselves whether they have
confidence in a Board that has decided on a complete change in the Company's
business strategy only after realizing at the eleventh hour that many of the
Company's major shareholders do not support the Board's long-standing
policies.
We think the answer is self-evident. Our Committee has the experience,
industry standing and commitment to implement its program to maximize
shareholder value. We don't believe the same can be said of the Company's
incumbent Board and management.
. Will conflicts of interest prevent the incumbent Board from aggressively
pursuing its new strategy?
In our view, only two of the Company's nine incumbent directors can
reasonably be considered truly independent outside directors. We believe the
remaining seven are in effect insiders who have benefited significantly from
the policies in effect prior to the Board's recent change of heart.
In our previous letter, we highlighted what we believe is an extraordinary
level of payments by the Company to law firms and financial consultants owned
by certain incumbent Board members. Will these directors aggressively pursue a
strategy that will end the flow of funds they receive from the Company?
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The Committee is also concerned at the apparent conflict of interest of
Board member Carl Ferenbach, who is also a Managing Director of Berkshire
Partners. Berkshire, with its fellow venture capital fund Fay Richwhite &
Company, controls each of the Company's international investments.
In the Committee's opinion, the underperformance of the Company's
international holdings is a direct result of the control exercised by these
two venture capital firms. EWS's earnings fell 68% in the third quarter of
this year compared with a year ago. Absent a major change in management
direction, we believe it is entirely possible that Wisconsin Central will lose
its entire investment in EWS. In our view, there is no one more responsible
for management performance at EWS than WCLX director Carl Ferenbach.
Will the incumbent Board be effective in disposing of the Company's
underperforming international investments in light of the Board's close
relationship with these venture capital funds? We believe our Committee, which
is free of conflicts of interest, will be effective in implementing our
program to maximize shareholder value. We think it is clear that the incumbent
Board--which is shot-through with conflicts of interest--cannot be counted on
to take the steps necessary to get Wisconsin Central back on the right track.
. Can Goldman Sachs effectively represent the interests of Wisconsin
Central shareholders?
Our Committee is greatly concerned over the appointment of Goldman Sachs as
the incumbent Board's financial advisor. This is the same investment banking
firm that the Board had previously hired to help defeat the Committee's
proposals.
Goldman was also the lead underwriter in the initial public offering of
Canadian National, and has served as CN's primary financial advisor ever
since. We believe that CN is the most likely bidder for WCLX's domestic
assets. The Company's appointment of Goldman Sachs appears to have been made
without considering the conflict of interest that will inevitably arise from
that firm's substantial past involvement with CN.
Goldman is a shareholder in both Tranz Rail and in English Welsh & Scottish
Railway and has a representative on the EWS Board. Goldman's representative on
the EWS Board has historically been supportive of Berkshire and Fay Richwhite
on management policy issues. The Committee therefore believes that Goldman,
like Berkshire, is likely to have interests beyond advising the incumbent
Board in disposing of these underperforming investments.
Once again, we shareholders are confronted with a potentially serious
conflict of interest situation. We believe there is a danger that Wisconsin
Central's overseas and domestic assets will be sold at fire sale prices in an
attempt by the incumbent Board to preempt the Committee's program. In our
view, Goldman's relationship with CN and its interests in EWS and Tranz Rail
do nothing but add to that risk.
. The Committee will implement its program in the interest of all
shareholders.
Our Committee has carefully planned its program to maximize shareholder
value and is confident that it has the experience and standing in the rail
industry to implement its program. Every one of the Committee's director
nominees has had hands-on experience in rail transport. Contrast that with the
incumbent Board's relative lack of practical management experience in our
industry! Since our Committee first made its proposals, share price has
increased by 31%. Now the Company's incumbent Board has adopted the major
points of the Committee's plan and is presenting it as their own. Where were
they while Wisconsin Central's performance and share price dropped
precipitously over the past 16 months?
Wisconsin Central shareholders have the right to determine their own future
by removing this Board and electing nominees of the Committee who are fully
committed to eliminating the conflicts of interest and maximizing shareholder
value. You can support our initiative. Do so by signing, dating and returning
the enclosed WHITE consent card.
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The issues are complex and may be difficult to follow for shareholders who
have not been directly involved in management of the Company. I would be happy
to discuss these matters with you by telephone or in person. Thank you for your
support.
Sincerely,
Edward A. Burkhardt
Chairman
IMPORTANT NOTE:
If you have any questions or need assistance voting your shares,
please call Innisfree M&A Incorporated or
the Committee at the following telephone numbers:
INNISFREE M&A INCORPORATED: 888-750-5834 (toll-free)
THE COMMITTEE: 773-714-8669
Please do not sign or return the Company's blue revocation card.
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