TFM acquisition agreement between KCS/Grupo TMM stands, Mexican arbitration panel says (3/22/2004)
3/22/2024After eight months, the Kansas City Southern/Grupo TMM S.A. battle over control of TFM S.A. de C.V. is drawing to a close. On March 22, the railroad announced an AAA International Centre for Dispute Resolution panel determined that KCS' and Grupo TMM's nearly year-old TFM acquisition agreement is binding.
The arbitration panel ruled that TMM shareholders' rejection of the agreement did not authorize the pact's termination, KCS officials said in a prepared statement.
The case now moves to a second phase under which the panel will determine remedies and damages.
In April 2003, TMM agreed to sell its 38.4 percent TFM stake to KCS, but TMM shareholders — led by majority holders TMM Chairman José Serrano and TMM Chief Executive Officer Javier Segovia — rejected the deal in August. TMM officials then sought to terminate the agreement.
In October, KCS initiated an arbitration proceeding after a 60-day informal negotiation period expired. The Delaware court granted KCS a preliminary injunction "to preserve the status quo" pending resolution of its dispute with TMM. The court also enjoined TMM from taking any action that would violate terms of the acquisition agreement until the dispute is resolved.
In January, the Delaware Court of Chancery held TMM in contempt for revoking TFM's powers of attorney — which required the signature of a KCS representative for transactions exceeding $2.5 million — and granting new TFM powers of attorney to Serrano and TFM CEO Mario Mohar. The court ordered TMM to revoke the new powers of attorney, re-enact the original powers of attorney, and pay KCS' costs and attorney fees for filing the contempt motion.
Source: Progressive Railroading Daily News