Posted on 08/18/2003 1:19:33 PM PDT by comnet
Shareholders vote 'No' on KCS's Nafta Rail effort Kansas City Southern's effort to create Nafta Rail appeared to fall apart Monday as stockholders in a Mexican rail company voted down the sale of controlling interest in a major Mexican rail line.
Terms of the transaction required the TMM shareholders' approval.
KCS and TMM together own an 80 percent stake in Mexico's TFM railroad. KCS announced in April it would try to buy out TMM's share.
Company officials on both sides of the border apparently were huddled Monday in efforts to decide how to respond to the shareholder vote.
According to terms of the original transaction, KCS was to nearly buy out its financially troubled partner with about $200 million in its own stock and another $200 million in cash. Because Mexican authorities had resolved a pending $200 million tax dispute in KCS's favor Aug. 14, Nafta Rail probably would have paid an additional $100 million to $180 million.
KCS CEO Michael Haverty had complained that the transaction encountered covert opposition from bigger U.S. railroads who'd tried to persuade Mexican regulators that they should receive discounts on the Mexican system even after KCS completed the transaction.
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