UPDATE 2-TCI group proposes new board slate at CSX

(Adds CSX comment)

NEW YORK, Dec 19 (Reuters) - The Children's Investment Fund stepped up its shareholder activist campaign at CSX Corp <CSX.N on Wednesday, joining with 3G Capital Partners to propose a new board slate at the rail transportation company.

The London-based fund, known at TCI, said it would propose five nominees, or a minority board slate, at next year's annual CSX shareholders meeting, likely in May.

TCI, a hedge fund that manages more than $10 billion, contends that CSX has underperformed in operational and financial metrics compared with similar companies.

CSX rejected the group's views and said its existing board has "driven the company's successes."

"CSX directors are well qualified to further advance the interests of the company's shareholders," said CSX in a statement.

TCI said it and 3G now hold 8.3 percent of the shares of Jacksonville, Florida-based CSX and derivatives giving it the equivalent of an additional 11.8 percent ownership.

The CSX campaign, first disclosed in October, is the first U.S. activist campaign for TCI, which successfully agitated in 2005 against the Deutsche Boerse AG's (DB1Gn.DE: Quote, Profile, Research, Stock Buzz) plans to buy the London Stock Exchange Group Plc (LSE.L: Quote, Profile, Research, Stock Buzz) and other moves.

"Our goal is a strong CSX that can provide the returns shareholders deserve," said TCI in a statement.