(Reuters circulated the following story on May 27.)
MEXICO CITY — Mexico’s stock market suspended trading of troubled transportation company TMM on Tuesday and ordered the company to confirm or deny a report that a court order shielding it from creditors is invalid.
Mexico’s leading broadcaster Televisa reported that the Mexico City judge who handed TMM a one-year grace period to block any legal actions from creditors had no power to make such an order. TMM is in default on $177 million of bonds,
Sources cited by Televisa said that only a federal judge could make such a protection order because TMM had sought protection under commercial laws and not via the equivalent of Chapter 11 bankruptcy protection, known as “concurso mercantil.”
“This stock exchange requires the company to confirm or deny the information divulged by third parties,” the bourse said in a statement.
TMM spokesmen were not immediately available for comment.
The Mexico City-based company has previously argued the complete opposite of Televisa’s sources, saying that a Mexico City court does have legal validity over commercial business legislation.
TMM believes it has valid creditor protection from the holders of the bonds in default, those holding its 10.25 percent senior notes due 2006 and those holding its receivable securitization trust certificates.
TMM — which announced last month the sale of two of its main assets representing 80 percent of its revenues in a bid to raise cash — failed to meet payments on bonds worth $177 million which were due on May 15.
U.S. railroad Kansas City Southern Industries Inc. on May 9 struck a $412 million deal with TMM to buy control of Mexico’s main rail-freight line to the U.S. border.
TMM, formally known as Transportacion Maritima Mexicana, in April said it would raise $120 million by selling a stake in a ports and terminals unit.