Standard & Poor's Ratings Services said it revised its outlook on CSX Corp. to negative from stable after the railroad company invited two of the board members nominated by the Children's Investment Fund Management Llp. (TCI) to join the board immediately.
"The outlook change reflects the longer-term possibility of a change in financial policy to a more aggressive one," S&P said.
On July 25, CSX had asked two nominees of activist hedge fund shareholders TCI and 3G Capital -- Gilbert H Lamphere and Alexandre Behring -- to join its board, but said it will await a vote review and court action before seating its two remaining members.
The addition of the TCI nominees to the board raises uncertainty over future financial policy since TCI has been critical of some of the directions taken by the CSX management and has in the past called for railroads to boost their debt levels, S&P said.
It said it affirmed CSX's "BBB-" long-term corporate credit rating reflecting its strong competitive position as one of the two large eastern U.S. freight railroads.
The ratings also factor in the company's limited cyclicality, high barriers to entry and access to low-cost equipment financing and its satisfactory financial risk profile in the North American freight railroad industry, it added.
(The preceding appeared on the Web site www.forbes.com on July 29, 2008.)