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In early 2004, an arbitration panel is expected to issue its decision on the validity of a TFM S.A. de C.V. purchase agreement between Kansas City Southern and Grupo TMM S.A., according to KCS Chairman, President and Chief Executive Officer Mike Haverty's "State of the Railroad" address released Dec. 16.

In April, TMM agreed to sell its 38.4 percent TFM stake to KCS — a major part of the Class I's NAFTA Rail plan — but TMM shareholders, led by majority stockholders TMM chairman Jose Serrano and TMM CEO Javier Segovia, rejected the deal in August. KCS officials believe the acquisition agreement still is valid and in effect until Dec. 31, 2004.

KCS initiated the arbitration proceeding after a 60-day informal negotiation period expired Oct. 29. Earlier that month, the Delaware Court of Chancery 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.

"Since KCS first made its historic investment in TFM in 1997, we have believed in the NAFTA economy, and we have believed in the importance of trade between Mexico and the United States for both countries' futures," said Haverty. "We remain hopeful that KCS and TMM will find resolution to this dispute."