(Reuters distributed the following article on April 6.)
MEXICO CITY — Mexican transport firm TMM and U.S. rail firm Kansas City Southern have agreed to shelve a plan for TMM to sell to Kansas City Southern its stake in Mexico’s top freight railroad, TFM, TMM said on Tuesday.
“In a condition signed by Group TMM and by KCS and accepted by the arbitration panel, the two companies have agreed to free themselves in good faith from all the obligations of the contract of sale,” TMM said in a statement late on Tuesday.
Debt-laden TMM agreed in April 2003 to sell its 41 percent stake in TFM to Kansas City Southern (nyse: KSU – news – people) for $412 million — but TMM shareholders rejected the deal in August, and TMM management called off the operation.
Kansas City Southern opposed the pullout, and both sides eventually agreed to arbitration to resolve their differences.
On March 22 an arbitration panel ordered TMM to honour the original accord, saying it was still valid and binding.
However in Tuesday’s statement, TMM said the two companies had agreed “to not immediately pass to the next stage of arbitration”.
Missouri-based Kansas City Southern said on Monday that Mexico’s Federal Competition Commission had granted it an extension of 180 days from April 2 to purchase the TFM stake.
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 percent stake, and the rest is owned by the Mexican government.