Mexican Government brings lawsuit against TMM and TFM

Mexican Government brings lawsuit against TMM and TFM    The Mexican government has brought a lawsuit against Transportacion Maritima Mexicana (TMM) and Grupo Transportaci'n Ferroviaria Mexicana, S.A. de C.V. (Grupo TFM) before a Mexican federal court, the two Mexican railroads said in a joint statement. Kansas City Southern has been named as a defendant, but it has not yet been served.
   On Wednesday the Federal Appellate Court upheld the claim by Grupo TFM that it is entitled to inflation and interest dating from 1997 on the 2.1 billion pesos ($18 million) value added tax refund it received from the Mexican Government in January last year. The Mexican Government has appealed that decision, but the Court did accept for consideration the government’s request to determine whether the defendants have complied with all of the legal obligations assumed during the process of the privatization of Grupo TFM (formerly Ferrocarril del Noreste, S.A. de C.V.).
   Grupo TFM is a joint venture owned by TMM (48.5 percent), Kansas City Southern (46.6 percent through a subsidiary), and the Mexican government (4.9 percent). It was the first railway to be privatized under Mexico’s National Development Plan, which includes the privatization of several government-owned-and-operated entities.
   “Notwithstanding the ongoing litigation, TMM and KCS will continue discussions with the Mexican Government aimed at resolving the outstanding disputes between the parties over the value added tax refund and the obligation to purchase the remaining shares of TFM, in accordance with law and the applicable agreements,” KCS and TMM said in a joint statement.