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Grupo TMM terminates sale of TFM stake to KCS

On Aug. 25, Grupo TMM S.A. announced its board formally notified Kansas City Southern that the company is terminating plans to sell its share of TFM S.A. de C.V. to KCS. On Aug. 18, Grupo TMM shareholders unanimously rejected the proposed sale — a major cog in KCS' NAFTA Rail plan.

Grupo TMM also notified the Mexican Foreign Investment Commission that the sale has been terminated. Grupo TMM officials believe the application "is now without substance," according to a prepared statement.

Grupo TMM directed its board "to pursue all reasonable alternatives" to restructure the company's $177 million debt and improve finances.

In April, Grupo TMM agreed to sell KCS its 38.4 percent stake in TFM for $412 million, including $200 million cash. KCS plans to place TFM, The Kansas City Southern Railway Co., The Texas Mexican Railway Co. and Gateway Eastern Railway Co. under the common control of NAFTA Rail, a Kansas City, Mo.-based holding company.

Last week, KCS officials said the Class I remained "committed to completing the transaction," and was exploring its agreement rights, and legal options under U.S. and Mexican law.

Mexico's Competition Commission previously approved the NAFTA Rail plan and the Foreign Investment Commission had expected to issue a ruling on or before Aug. 28. Surface Transportation Board plans to rule on NAFTA Rail's U.S. transactions Oct. 17.

KCS currently owns 41 percent of TFM and the Mexican Government, 20 percent.

Contact Progressive Railroading editorial staff.

More News from 8/25/2003