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Mexico's Foreign Investment Commission (FIC) recently postponed its plan to rule on Kansas City Southern's proposed purchase of Grupo TMM S.A.'s 38.4 percent stake in TFM S.A. de C.V. until KCS and TMM resolve their differences over the transaction. FIC had planned to issue a decision on or before Aug. 28.
On Aug. 18, TMM shareholders unanimously rejected the proposed sale — a major cog in KCS' NAFTA Rail plan — and TMM officials later notified FIC that the sale had been terminated and KCS' application "is now without substance."
But KCS officials expected TMM shareholders to approve the sale based on information they were given prior to the vote, said KCS Chairman, President and Chief Executive Officer Mike Haverty in a prepared statement. KCS officials believe the transaction agreements still are in force and binding, and that both parties are obligated to exercise the transaction in good faith.
"We believe the FIC decision would allow the transaction to move forward once the dispute between the parties is resolved," said Haverty. "The FIC decision reaffirms the Mexican government's commitment to the rule of law."
KCS will deliver to TMM a notice of dispute, which will initiate a 60-day negotiation period, KCS said. If the parties are unable to resolve the dispute within that time period, KCS intends to initiate binding arbitration.
"After consulting with U.S. counsel, we have concluded that the contract between KCS and TMM to acquire TFM shares remains valid," said Vicente Corta, a partner in law firm White & Case and Mexican legal advisor to KCS. "We will pursue all legal means to protect KCS' rights under that contract. The FIC decision leaves the door open for us to complete this transaction."
8/28/2003
Rail News: Rail Industry Trends
Mexico's Foreign Investment Commission delays TFM-purchase decision until KCS, TMM resolve dispute
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Mexico's Foreign Investment Commission (FIC) recently postponed its plan to rule on Kansas City Southern's proposed purchase of Grupo TMM S.A.'s 38.4 percent stake in TFM S.A. de C.V. until KCS and TMM resolve their differences over the transaction. FIC had planned to issue a decision on or before Aug. 28.
On Aug. 18, TMM shareholders unanimously rejected the proposed sale — a major cog in KCS' NAFTA Rail plan — and TMM officials later notified FIC that the sale had been terminated and KCS' application "is now without substance."
But KCS officials expected TMM shareholders to approve the sale based on information they were given prior to the vote, said KCS Chairman, President and Chief Executive Officer Mike Haverty in a prepared statement. KCS officials believe the transaction agreements still are in force and binding, and that both parties are obligated to exercise the transaction in good faith.
"We believe the FIC decision would allow the transaction to move forward once the dispute between the parties is resolved," said Haverty. "The FIC decision reaffirms the Mexican government's commitment to the rule of law."
KCS will deliver to TMM a notice of dispute, which will initiate a 60-day negotiation period, KCS said. If the parties are unable to resolve the dispute within that time period, KCS intends to initiate binding arbitration.
"After consulting with U.S. counsel, we have concluded that the contract between KCS and TMM to acquire TFM shares remains valid," said Vicente Corta, a partner in law firm White & Case and Mexican legal advisor to KCS. "We will pursue all legal means to protect KCS' rights under that contract. The FIC decision leaves the door open for us to complete this transaction."
