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First on NAFTA Rail agenda: KCS acquires majority of Mexrail stock


On May 9, Kansas City Southern purchased 51 percent of Mexrail Inc. stock from TFM S.A. de C.V. for $32.6 million and placed the shares in an independent voting trust.

The stock will remain in the trust until Surface Transportation Board issues a decision on KCS' and TFM's NAFTA Rail plan under which The Kansas City Southern Railway Co., TFM, Mexrail subsidiary The Texas Mexican Railway Co. and the Gateway Eastern Railway Co. would be commonly controlled by a new Kansas City, Mo.-based holding company.

KCS indirectly owned a minority Mexrail interest through its ownership stake in TFM, which previously wholly owned Mexrail. Now, KCS owns a little more than half of Mexrail's stock, with an option to acquire the remaining 49 percent.

KCS named former Wisconsin Central Transportation Corp. President and Chief Executive Officer Thomas Power Jr. trustee, with control over Mexrail and Tex Mex until the voting trust dissolves and STB renders a decision (which is expected to take six to 12 months). James Riney will continue to serve as Tex Mex general manager.

STB should treat NAFTA Rail as a "minor" transaction under current merger rules because the deal only involves common control of a Class I, Class II and Class III carrier from end to end, with no planned reductions in the number of carriers serving customers, KCS and Grupo TMM S.A. de C.V. officials believe.

Contact Progressive Railroading editorial staff.

More News from 5/12/2003