(The following article by Randolph Heaster was published by the Kansas City Star on May 1.)
KANSAS CITY — Kansas City Southern on Wednesday said it would sell $175 million in preferred stock to fund part of its proposed acquisition of Mexico’s biggest railroad.
The undisclosed buyers will acquire 350,000 redeemable, convertible preferred shares valued at $500 each. Kansas City Southern also has granted the purchasers an option to buy an additional $25 million of the preferred stock.
Last week, Kansas City Southern agreed to take controlling interest in Grupo TFM from its Mexican partner, Grupo TMM. The company agreed to pay TMM $412 million, up to $200 million of which would be in cash and the remainder in stock.
The new railroad, to be called NAFTA Rail, would combine TFM’s tracks in Mexico City and key Mexican ports to Kansas City Southern’s central U.S. routes.
TMM will own 22 percent of NAFTA Rail, if the deal is approved by regulators and Kansas City Southern and TMM shareholders.