Grupo Mexico Signs Rail Accord With Kansas City Southern

Mexican mining and railway company Grupo Mexico SAB (GMEXICO.MX) said Tuesday it has signed an agreement with Kansas City Southern de Mexico, or KCSM, on interconnection and rights of way between the two railroad operators.

In a filing with the Mexican stock exchange, Grupo Mexico said the accord, which includes the cities of Guadalajara, Monterrey and Aguascalientes, settles a dispute between the two companies. KCSM, a unit of Kansas City Southern (KSU) runs one of Mexico's three main railways, while Grupo Mexico operates the other two through Ferromex and Ferrosur.

The accord sets the rates that the companies must pay each other for interconnection and rights of way on each other's rails and terminals.

"The signing of this accord puts an end to the legal controversies between the two sides regarding these matters," Grupo Mexico said. The company said KCSM has also signed an agreement with Ferrosur that increases KCSM's access in the central states of Puebla and Tlaxcala and the Gulf coast port of Veracruz. As a result of the accord, KCSM agreed to withdraw its objections to the merger of Ferrosur into Grupo Mexico's transport and infrastructure division ITM, which also includes Ferromex, Grupo Mexico said.

The objections led to a probe by the federal antitrust commission, which ruled against the 2005 merger and levied fines against Ferromex, Ferrosur and their owners--Grupo Mexico, conglomerate Grupo Carso (GPOVY) and a unit of Grupo Financiero Inbursa (GFINBUR.MX)--prompting an appeal by the companies.

Grupo Mexico said Tuesday it expects the accord with KCSM to increase the efficiency and competitiveness of the Mexican railways, and that the case of the merger can be resolved favorably as a result.

-By Anthony Harrup, Dow Jones Newswires, (5255) 5890 5176, anthony.harrup@dowjones.com

Grupo Carso Sa de CV (PK) (USOTC:GPOVY)
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