TMM found in contempt of court in KCS dispute
Kansas City Southern, the railroad involved in a dispute over a takeover with Mexico City-based Grupo TMM, S.A., has welcomed a ruling made on Tuesday by the Delaware Court of Chancery regarding a motion to enforce an injunction and hold TMM in contempt of court in its dispute with KCS.
“The Delaware Court of Chancery held TMM in contempt of court for taking action inconsistent with its Oct. 29, 2003, order that TMM abide by the terms and conditions of the acquisition agreement pending arbitration of the parties’ dispute over the agreement,” KCS said.
KCS said that the court held that by TMM changing its powers of attorney, it violated provisions of the acquisition agreement. The previous order of the court required TMM to cause its subsidiary Grupo TFM to conduct its business in accordance with past practices and not to directly or indirectly amend its organizational documents, the KCS statement said. The court ordered TMM to take the actions necessary to revoke the new powers of attorney, to re-enact the original powers of attorney, and to pay KCS its costs and attorney fees for bringing this motion for contempt, the railroad added.
KCS said that it believes the Delaware Court’s decision is “appropriate,” and upholds KCS’s belief that TMM cannot arbitrarily take actions without KCS’s agreement.
KCS had planned to merge Kansas City Southern Railway Co. with Mexico-based Grupo TFM to form “NAFTA Railway.” Last September, the KCS board of directors affirmed the company’s efforts to pursue all legal means to enforce provisions of the acquisition agreement between KCS and TMM.