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9/4/2003



Rail News: M&A

KCS' lawsuit 'is without merit,' TMM says




On Sept. 4, Grupo TMM S.A. officials responded to Kansas City Southern's lawsuit filed Sept. 2 in a Delaware court seeking a preliminary injunction that would prevent TMM from selling its TFM S.A. de C.V. stake until both parties resolve their dispute.

The lawsuit "is without merit" and TMM "will vigorously defend the action through all available legal means," TMM officials said in a prepared statement.

KCS is trying "to create uncertainty" and impede TMM's continued efforts to restructure outstanding debt, TMM officials believe.

Under an acquisition agreement, TMM agreed to sell its 38.4 percent TFM stake to KCS, but on Aug. 19, TMM shareholders — led by majority stockholders TMM chairman Jose Serrano and TMM CEO Javier Segovia — rejected the deal.

"TMM's stockholders exercised their legal rights to vote against the approval of the acquisition agreement, and that is not a fact that KCS can change through this litigation," TMM officials said.

After all facts have been presented, TMM officials expect the court to deny KCS's motion and any arbitration proposal derived from a formal notice of dispute, which initiates arbitration procedures if the parties are unable to negotiate a settlement.




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