Across the Border: Court decides the Mexican rail dispute

Court decides the Mexican rail dispute . . . maybe

TMM may seek arbitration in sale of railroad to Kansas City Southern

A Delaware court has ordered Mexico's Transportación Maritima Mexicana (TMM) to sell the shares of its railroad subsidiary Transportación Ferroviaria Mexicana (TFM) to its closest partner, Kansas City Southern (KCS).

Both companies have been operating the bi-national railroad company since 1997, but last year they went into litigation after TMM backed down from selling its shares to KCS, although management of both companies had signed a contract to do so. KCS filed the suit, and it has won.

Yet, according to TMM spokesman Marco Provencio, TMM will move to a second round of arbitration to fine tune the process. Provencio says that even if a Delaware court ordered the sale, things still look complicated to TMM chairman Jose Serrano and his partner Mario Mohar, who hold voting rights for all shareholders.

“No transaction can be made without the consent of shareholders,” continues Provencio, “and in that sense the panel's decision is inconclusive. We have here an on-going story and it will be a long time before it's concluded. It's got more chapters than there are wagons in TFM's longest trains.” LT

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May, 2004

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