KCS Latest on the TMM deal

From the Reuters news service wire:

Panel says TMM, Kansas City rail deal still valid
March 22, 2004 12:16:00 PM ET


MEXICO CITY, March 22 (Reuters) -
An arbitration panel has told Mexico's transport firm TMM to stick to a contract to sell its stake in the country's top freight railroad to U.S. rail firm Kansas City Southern, the two companies said on Monday.

In August 2003, TMM (TMM) shareholders rejected TMM's sale of its 41 percent in TFM to Kansas City Southern (KSU) for $412 million.

As a result TMM management called off the sale. Kansas City Southern opposed the pullout from the deal, with both sides eventually agreeing to arbitration to resolve their differences.

Kansas City Southern said in a statement on Monday a panel of the AAA International Centre for Dispute Resolution found the original acquisition agreement between the two companies remains in force and is binding.

"Kansas City Southern and TMM will now move on to the second phase of the arbitration, which will decide the remaining issues, including Kansas City Southern's remedies and damages," the Missouri-based rail operator said.

TFM, which owns a concession to operate through 2047 the only Mexican freight line to Laredo, Texas, is 39-percent owned by Kansas City Southern. TMM has a 41 stake, with the remaining 20 percent owned by the Mexican government.

The Mexico-Laredo line is the busiest U.S.-Mexico freight operation, carrying 40 percent of Mexico's rail cargo.

TMM said in a statement on Monday its shareholders' rejection of the sale of its TFM stake sale did not allow the company to finish the contract.

"TMM thinks that no transaction can take place without shareholders' approval," the company said. "The panel's decision is not final. TMM will continue to evaluate the arbitration process ... with its attorneys and will continue exploring alternatives."

Kansas City Southern and TMM officials were not immediately available for further comment. REUTERS

 

Something to remember-Pepe Serrano, CEO of TMM negotiated the merger and then turned around and voted his 80% stake against the
deal just four months later. You have to be careful to understand which side of his mouth he's talking out of at any given point. Also
amusing is that Delaware law (which applies in cases of dispute between these two partners) tends to favor management's wishes over
shareholders; ergo, Serrano's negotiation of the merger as CEO took precedence over his vote against the deal as a shareholder.

As Alice said, it gets curiouser and curiouser....

 

When I read stories such as this, and such scenarios seem to be occuring with greater frequency, they remind me of a book I once read- Atlas Shrugged.



Boxcab E50