(KCS and Grupo TMM issued the following news release on September 16.)
MEXICO CITY — Kansas City Southern and Grupo TMM, S.A. and announced today that Mexico’s Foreign Investment Commission (“FIC”) delivered a notice that the FIC had resolved to deny KCS’ application for authorization of KCS’ proposed acquisition of TMM’s interest in TFM, S.A. de C.V., which operates a major rail freight carrier in Mexico. The approval of the FIC is necessary for a foreign company to become a majority owner of a Mexican-based railway company.
KCS and TMM stated that they are disappointed by this decision, and that it is not in the spirit of the North American Free Trade Agreement (“NAFTA”) nor consistent with previous decisions made by the FIC on foreign majority ownership, including ownership of another railroad in Mexico.
KCS and TMM are actively involved in discussions with the FIC and believe that they are close to an agreement to resolve these matters. KCS and TMM will seek reconsideration of this decision and remain confident that they should ultimately obtain approval of the transaction. KCS and TMM have agreed to extend the current deadline under the April 20, 2003 acquisition agreement until June 15, 2005 to provide additional time to complete this transaction.
KCS is a transportation holding company that has railroad investments in the United States, Mexico, and Panama. Its primary holding is The Kansas City Southern Railway Company. Headquartered in Kansas City, Missouri. KCS serves customers in the central and south central regions of the U.S. KCS’ rail holdings and investments are primary components of a NAFTA Railway system that links the commercial and industrial centers of the United States, Canada and Mexico.
Headquartered in Mexico City, Grupo TMM is Latin America’s largest multimodal transportation company. Through its branch offices and network of subsidiary companies, Grupo TMM provides a dynamic combination of ocean and land transportation services. Grupo TMM also has a significant interest in TFM, which operates Mexico’s Northeast railway and carries over 40 percent of the country’s rail cargo. Grupo TMM’s web site address is www.grupotmm.com and TFM’s web site is www.tfm.com.mx.