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Yesterday, Grupo TMM S.A. and Kansas City Southern announced a Mexican fiscal court upheld TFM S.A. de C.V's claim for inflation and interest adjustments from 1997 on a value-added tax (VAT) refund TFM received from the Mexican government.

On Jan. 19, TFM received a VAT refund certificate in the original amount of its claim (about $186 million) without any adjustments for accrued inflation or interest. Earlier this month, a Mexican appellate court also upheld TFM's claim.

TMM and KCS officials plan to continue trying to resolve the VAT claim dispute with the Mexican government so they can complete their TFM deal.

Last month, KCS and TMM reached an amended sale agreement under which TMM will sell its 51 percent voting interest in TFM to KCS for $200 million in cash, 18 million shares of KCS common stock, $47 million in a two-year promissory note, and up to $110 million payable in a combination of cash and KCS common stock pending the outcome of the VAT claim.

The deal still is subject to KCS shareholder approval, which KCS officials expect to obtain by March.