Court orders govt. to pay VAT refund to TFM

A Mexican federal fiscal court has ordered the government to pay the 2.1bn-peso (US$189mn) value added tax (VAT) refund plus inflation and interest from 1997 to railway concessionaire TFM, concessionaire owners TMM and KCS said. The fiscal court upheld the November 2004 ruling by a federal appellate court. The new, adjusted amount may come to as much as US$1bn, analysts recently told BNamericas, and this issue was a catalyst for TFM controller Grupo TMM (BMV, NYSE: TMM) to agree to sell its TFM shares to US railway company Kansas City Southern (NYSE: KSU). Kansas City Southern (KCS) announced mid-December a 51% purchase share offer of TFM for US$200mn in cash. KCS will also provide 18 million shares of KCS common stock, US$47mn in a two-year promissory note, and up to US$110mn payable in a combination of cash and KCS common stock. TFM provides the primary rail route in northern Mexico linking Mexico City with Laredo, Texas, where more than 50% of US-Mexico trade crosses the border. The line also connects major Mexico population centers in Monterrey and Guadalajara and the ports of Lazaro Cardenas, Veracruz and Tampico. The 2,661-mile line accounts for 19% of rail in Mexico and carries 40% of the country's total rail cargo.