KCS, TMM settle dispute with Mexican government
Kansas City Southern (KCS) and its subsidiaries TFM and Grupo TFM, and Mexican holding company Grupo TMM, Tuesday reached a settlement with the Mexican government to resolve a long-standing dispute concerning the payment of a value-added tax refund to TFM.
TFM had claimed it was 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 2004. TFM (formerly Ferrocarril del Noreste) was the first railway to be privatized under Mexico’s National Development Plan.
As a result of the settlement, KCS and its subsidiaries now have 100 percent ownership of Grupo TFM and TFM and the potential obligation of KCS, Grupo TFM, and Grupo TMM to acquire the Mexican government’s remaining 20 percent ownership of TFM has been eliminated.
“The legal obligation of the Mexican government to issue the VAT refund to TFM has been satisfied,” KCS said.
Under terms of the settlement no cash payment will be made by any party. In addition, the parties entered into mutual releases of all existing and potential claims relating to the dispute, and agreement to dismiss all of the existing litigation between the parties by the end of this week.
