friscobob
November 14th, 2003, 01:49 PM
KCS Poised to Buy Out Mexican Government's Stake in Railroad
Author: TO News from KCSI
Kansas City Southern is poised to buy out the Mexican government's stake in a formerly government-owned railroad, if necessary. "We are prepared and can financially meet our obligations in Mexico," said Warren Erdman, KCS vice president of corporate affairs.
KCS is a minority partner with Mexico City-based Grupo TMM in another Mexican company called Grupo TFM, which since 1997 has owned 80 percent of the Mexican railroad. As expected, shortly after Oct. 31 the government
informed Grupo TFM that it intends to require TFM to buy the remaining 20 percent stake that the government holds in the railroad, Erdman said.
Financially strapped Grupo TFM has sued, demanding a judge's interpretation of the 1997 sales agreement allowing Mexico to make the nearly $500 million "put."
"As such, Grupo TFM has taken the position that they're not going to respond
(to the put) until that is cleared up," Erdman said.
If financially strapped TFM can't buy the stake, TMM and KCS are required to buy it, Erdman said. Because TMM is already in default to
major creditors, the company may not be able to buy, as previously promised, its 51 percent share of the government's remaining stake. That's why KCS has prepared to buy the shares, Erdman said.
"If either of the parties fails to meet that obligation, then the other party may be required to purchase the portion that the other party did not purchase," he said.
Author: TO News from KCSI
Kansas City Southern is poised to buy out the Mexican government's stake in a formerly government-owned railroad, if necessary. "We are prepared and can financially meet our obligations in Mexico," said Warren Erdman, KCS vice president of corporate affairs.
KCS is a minority partner with Mexico City-based Grupo TMM in another Mexican company called Grupo TFM, which since 1997 has owned 80 percent of the Mexican railroad. As expected, shortly after Oct. 31 the government
informed Grupo TFM that it intends to require TFM to buy the remaining 20 percent stake that the government holds in the railroad, Erdman said.
Financially strapped Grupo TFM has sued, demanding a judge's interpretation of the 1997 sales agreement allowing Mexico to make the nearly $500 million "put."
"As such, Grupo TFM has taken the position that they're not going to respond
(to the put) until that is cleared up," Erdman said.
If financially strapped TFM can't buy the stake, TMM and KCS are required to buy it, Erdman said. Because TMM is already in default to
major creditors, the company may not be able to buy, as previously promised, its 51 percent share of the government's remaining stake. That's why KCS has prepared to buy the shares, Erdman said.
"If either of the parties fails to meet that obligation, then the other party may be required to purchase the portion that the other party did not purchase," he said.