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TMM, KCS plow ahead with plans to purchase Mexico's TFM share

Transportación Maritima Mexicana S.A. de C.V. and Kansas City Southern Railway July 18 announced that the companies will proceed with plans to acquire the Mexican government's 24.6 percent share of Transportación Ferroviaria Mexicana S.A. de C.V. for about $170 million due to TFM's improving credit rating.
Along with credit boosting action taken by Moody's Investors Service, Standard & Poor's July 17 affirmed its double-B-minus corporate credit and senior unsecured debt ratings on TFM, citing favorable prospects for the Mexican economy that partially offset additional risks posed by the slowing U.S. economy.
S&P officials believe TFM's revenue growth and improving profitability are leading to healthier cash-flow projection measures despite the railroad's significant debt burden.
"We anticipate the acquisition of this additional equity in TFM will be highly accretive to both TMM's and KCS' shareholders, and will provide both partners with the additive value of 10 percent additional cash flow for each partner," said TMM Chairman Jose Serrano in a prepared statement.
TMM plans to disclose specific details of the TFM transaction July 24 during its second-quarter conference call and Web cast.
TMM and KCS June 12 initially announced their intent to purchase the TFM share, estimating that the companies would finalize the transaction during third-quarter 2001.

Contact Progressive Railroading editorial staff.

More News from 7/19/2001