S&P says Kansas City Southern unchanged

Standard & Poor's said Kansas City Southern's ratings are unchanged including its corporate credit at BB- with a negative outlook following the ruling by the arbitrator in the dispute between the company and Grupo TMM SA.

According to the arbitrator, the agreement entered into by TMM and Kansas City Southern remains in force and is binding. Kansas City Southern and TMM will now move on to the second phase of the arbitration process, which will decide the remaining issues, including remedies and damages due Kansas City Southern.

Kansas City Southern's relationship with its 46%-owned affiliate, Grupo TFM, remains strained at this time, and the outcome of its proposal to take control of TFM is uncertain, S&P said. Ratings incorporate room for Kansas City Southern to complete the TFM transaction as originally proposed.

However, if financial performance at Kansas City Southern or TFM weakens from expected levels, if the TFM deal goes forward under more onerous terms, or if Kansas City Southern is required to fund the full amount of an option under which the Mexican Government can put its indirect 20% ownership stake in TFM to other owners, ratings could be reviewed for a downgrade.

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