Transportacion Ferroviaria Mexicana (TFM)

active

On 5 December 1996, Transportacion Ferroviaria Mexicana (TFM) bought an 80% stake in the 50-year concession contract for the operation of Ferrocarril del Noreste, Mexicoil's northeastern railway line. This is the first of three concession contracts to operate freight services on Mexico's national network. To prepare for these private concessions, National Railways of Mexico (FNM) divided the national network into three regional systems, a terminal company serving greater Mexico City, and the Chihuahua-Pacific short-line network. Three consortia made the shortlist in a bid for the northeast line. TFM won with a bid of $1.4 billion for the government plus investment of US$ 700 million during the first five years - a bid 2.5 times as high as the next largest. TFM is a partnership between Transportaciones Maritimas Mexicanas (49%) and the US firm Kansas City Southern Industries (51%). The agreement was at risk when TFM's initial financing fell apart, but the government stepped in with a $200 million bridge equity stake in return for an additional 11% stake. TFM also acquired a 25% stake in the Valle de Mexico terminal as part of its concession. This will result in effective privatization of the terminal once FNM has awarded all three network concessions. Ferrocarril del Noreste's 3,928km of track runs from Nuevo Laredo, on the border with Texas, to Lazaro Cardenas on the Pacific and Veracruz on the Gulf of Mexico. TFM borrowed $625 million through bonds and a syndicated bank loan in mid-1997 to pay its final $625 million for the concession, and to cover $200 million of investment in locomotives, rolling stock and telecommunications. TFM also acquired a US$ 150 million revolving credit line. In March 1999, TFM had plans to invest US$ 59.8 million. In Sep. 2000, TFM issued US$ 300 million in commercial paper; the funds will be used to refinance the company's debts with commercial banks. In 1999, the private sponsors started the process to acquire the remaining 20% stake of TFM that was still held by the government. TFM paid $170 million for this remaining stake in July of 2001. In 2001, the company announced plans to float shares on the Mexican and New York Stock Exchanges. None None