Date: Thu, 20 Nov 1997 17:40:31 GMT Server: Apache/1.2.4 Last-Modified: Wed, 25 Jun 1997 01:56:46 GMT ETag: "1106-1394-33b07ade" Content-Length: 5012 Accept-Ranges: bytes Connection: close Content-Type: text/html
MEXICO CITY, June 23 -- Transportacion Ferroviaria Mexicana (``TFM'') announced today both the successful completion of the financing for its purchase from the Mexican government of the Northeast Railroad concession, Mexico's premier rail line, and the assumption of the management of the railroad at a ceremony held in Monterrey.
Participating at the ceremony were Mexico's President Ernesto Zedillo
and other government officials as well as TFM's senior management and representatives
from TFM's two controlling shareholders, Transportacion Maritima Mexicana
(``TMM'') (NYSE:TMM.A/TMM
) and Kansas City Southern Industries,
Inc. (``KCSI'') (NYSE
:KSU
).
TFM now takes over the operation of the Northeast Railroad which is Mexico's strategically most significant rail link with the U.S. in the NAFTA corridor. Accordingly, the Northeast Railway, TFM, TMM and KCSI are all well positioned to be major participants in and beneficiaries of the growing flow of goods both in Mexico and under NAFTA. TMM is Latin America's largest integrated transportation company and KCSI owns the Kansas City Southern Railway, a class one U.S. rail carrier.
Mario Mohar, Chief Executive Officer of TFM, stated, ``We are very confident about both the prospects for the Northeast Railroad as the NAFTA railroad and our accomplishments in the short time since we were awarded the concession. Specifically, we have established for the railroad a strong and sound financial structure putting in place U.S. $807 million of equity capital and raising U.S. $725 million of debt financing, which is comprised of U.S. $325 million of bank debt and U.S. $400 million of high yield securities. In addition, TFM has established bank revolving lines of credit of U.S. $150 million. The purchase of the Northeast rail concession by TFM represents the largest leveraged acquisition ever in Latin America, demonstrating investor confidence in TFM's plan for the railroad and validating the potential of Mexico's economic growth.
``Our excitement for the potential of the Northeast Railroad under TFM's direction clearly is shared by the overwhelming response we received from the financial marketplace in achieving our funding objectives. The recognition of the Northeast Railroad's ability to grow as a world class railroad is reflected by the international scope of our funding sources, institutions from Latin America, the United States, Europe as well as other parts of the world.
``Our business strategy is very precise and very achievable. The Northeast Railroad is the NAFTA railroad. We assume management of a railroad which, simply by definition of its location, without any of our planned substantial improvements in marketing, service, equipment and technology, presently transports over 40 percent of Mexico's rail cargo on 19 percent of Mexico's rail track. It also is strategically located next to Mexico's primary North/South truck lanes. Linking directly Mexico City and Monterrey as well as Guadalajara through trackage rights, it also serves three of the four most important ports in Mexico: Lazaro Cardenas, Veracruz and Tampico/Altamira. The Northeast Railroad, under TFM's ownership, will connect in Laredo, Texas, to the Union Pacific and the Texas-Mexican Railroad, which, in turn, links to the Kansas City Southern Railway, BNSF, and to other major carriers throughout the U.S. Approximately 60 percent of all rail traffic, based on revenue between the U.S. and Mexico crosses the border at Laredo.
``With this key rail line now privatized and operated by TFM and with the substantial capital investments that TFM will be making to upgrade the line, we are confident that the Northeast Railroad will grow as a profitable world class railroad and a leading transporter of goods in the NAFTA corridor. We are the southern part of the NAFTA highway and will serve as a user-friendly link with all North American railroads,'' Mr. Mohar said.
TFM, headquartered in Mexico City, is owned by TMM and by KCSI with the Mexican government presently holding a limited voting rights ownership interest.
Contact: Brad Skinner or Mario Gonzalez of Transportacion Ferroviaria Mexicana, 011-528-305-7877; or Robert Siegfried of Kekst and Company, 212-521-4832