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Yesterday, Grupo TMM S.A. and Kansas City Southern announced TFM S.A. de C.V. obtained a written Value-Added Tax (VAT) decision from a federal fiscal and administrative court, ordering the Mexican government to pay TFM the original amount of a 1997 VAT refund (about $186 million) as well as adjustments for inflation and interest. Last month, the court issued a decision favoring TFM after a Mexican appellate court had similarly ruled.

On Jan. 19, TFM received a VAT refund certificate in the original amount of its claim without any adjustments for accrued inflation or interest. The fiscal court ordered federal tax authorities to issue a single certificate to TFM including the refund, adjustments for inflation and interest accrued from the date the refund should have been paid in 1997 to the date the government delivers the certificate to TFM.

TMM and KCS officials are trying to resolve the VAT claim dispute with the Mexican government so they can complete their TFM deal. In December, 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 next month.