Kansas City Southern (KCS) KSU today announced that its wholly owned subsidiary, The Kansas City Southern Railway Company (KCSR) and a Mexican affiliate have purchased 75 SD70MAC locomotives from El-Mo-Mex, Inc. for $32.625 million plus the assumption of approximately $95.9 million in debt and accrued interest. KCSR intends to sell all of the locomotives to an unaffiliated third party and enter into a long-term, leveraged lease of the locomotives. "This transaction is another step toward making KCS' U.S. and Mexican operations more efficient, reducing costs and taking advantage of economies of scale," said KCS chairman, president and chief executive officer Michael R. Haverty. Headquartered in Kansas City, Mo., KCS is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holdings include KCSR and Texas Mexican Railway Company, serving the central and south central U.S. Its international holdings include TFM, S.A. de C.V., serving northeastern and central Mexico and the port cities of Lazaro Cardenas, Tampico and Veracruz, and a 50% interest in The Panama Canal Railway Company, providing ocean-to-ocean freight and passenger service along the Panama Canal. KCS' North American rail holdings and strategic alliances are primary components of a NAFTA Railway system, linking the commercial and industrial centers of the U.S., Canada and Mexico. Contact Information: Kansas City Southern Media Contact: C. Doniele Kane, 816-983-1372 doniele.c.kane@kcsr.com or Investor Contact: William H. Galligan, 816-983-1551 william.h.galligan@kcsr.com [ November 04, 2005, 03:12 PM: Message edited by: friscobob ]
TO clarify this, here's a statement by one of the members from the KSCgroup at Yahoo! : "Take it to the bank, boys. I called the company yesterday evening and confirmed that it's the TFM units being bought, sold and leased back. Basically, KCS has a better credit profile now than TFM did when the leases were riginated. That means they can get a lower interest rate on financing the units. I don't know if the original lessor balked at reducing the rate or not, but clearly they've found a lessor willing to give them a better rate." This is not unique- in fact, KCS did this with a chunk of their motive power some years ago. No word if the diesels will continue to wear TFM markings or will get KCS lettering. Also, there is word out that an order for SD70ACes should arrive around the end of 2005.
Yep, sounds like a smart financial move.... A lot of assets are flipped or turned when interest rates drop and/or credit ratings improve. Harold
Yes. It is a smart move. Just like refinancing your house at a lower rate. Shrinking the payment, or even shortening the loan term. Sounds like they have some shrewd management at KCSI. Boxcab E50
Harvety (sp) seems to be doing a good job over the last couple of years, let's hope the trend continues. i'd love to see KCS keep expanding. beast
Believe it's spelled Haverty. I do agree that he's doing very nicely. Some days, I wonder about all teh wild rumors. If they keep going, will we see KCS take over a big Classs One some day...??? Now that would be unique. Very interesting! Boxcab E50
