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Grupo TMM S.A. de C.V. recently hired investment banker Miller, Buckfire, Lewis L.L.C. to re-initiate negotiations with creditors. On May 23, a Mexican court rejected Grupo TMM's attempt to obtain a one-year period to pay off creditors and honor other financial obligations.


The multi-modal transportation and logistics company assumed debt when it acquired Mexico's Northeast Railway (now known as TFM S.A. de C.V.) with Kansas City Southern in 1996.


In late 2002 and early 2003, Grupo TMM presented various offers to holders of bonds set to mature May 15. Because it couldn't secure sufficient bondholder consents, the company opted to sell assets to generate the necessary liquidity, including its TFM interest to KCS for $412 million as part of KCS' NAFTA Rail plan.


"After more than five months of negotiations with bondholders, with an equal number of extensions of the company's exchange offer, and after amending such offers three times with the goal of encouraging its creditors to grant Grupo TMM the necessary time to finalize the sale of assets and be able to fulfill its obligations, the company was unable to obtain the percentage of support required for the bond exchange to be completed on terms that were commercially reasonable for the company," said Grupo TMM officials in a prepared statement.


On May 28, KCS issued a statement saying Grupo TMM's bondholder developments are not related to KCS or TFM.


"KCS remains firmly committed to creating NAFTA Rail, publicly announced on April 21, and to proceeding with the purchase of TFM once it is approved by the relevant regulatory authorities," KCS officials said.