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KCS updates sustainability data

Rail News Home Kansas City Southern 7/22/2022 Rail News: Kansas City Southern
image Kansas City Southern yesterday released a 2021 data update to its sustainability report, "For the Long Haul: Delivering Prosperity, Valuing People, Protecting the Planet."  The report and data update follow the Global Reporting Initiative’s latest standards for disclosing governance, economic, social and environmental topics, and is in alignment with the Sustainability Accounting Standards Board and Task Force on Climate-Related Financial Disclosures frameworks, KCS officials said in a press release. The data updates show that KCS: • had its greenhouse-gas (GHG) emissions reduction targets approved by the Science-Based Target initiative. In 2021, KCS established targets committing to reducing its scope 1 and 2 GHG emissions per million gross ton-miles at least 42% by 2034, from a 2019 base year; • improved its reportable injury frequency rate, finishing the year with a 6% reduction from 2020; • engaged key stakeholders across its value chain, refreshing the materiality assessment to enhance the Class I's sustainability commitments; and • improved its CDP climate change disclosure score to an A-, landing a spot in the Leadership Level category. "In 2021, [we] continued our sustainability journey by refreshing our materiality assessment and making meaningful progress towards our carbon reductions goals," said KCS President and CEO Patrick Ottensmeyer.

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KCSM to invest in Celaya rail line, receives concession exclusivity extension in Mexico

Rail News Home Kansas City Southern 7/20/2022 Rail News: Kansas City Southern
image Kansas City Southern today announced its affiliate Kansas City Southern de Mexico has reached an agreement with the Mexican Ministry of Infrastructure, Communications and Transportation (SICT) to fund a new investment in the Celaya-NBA Line Railway Bypass and other infrastructure. The investment amount will not exceed 4 billion pesos, or about $195.5 million. In exchange for the investment, the SICT agreed to amend KCSM’s "Concession Title," effective July 14, to extend its exclusivity rights for an additional 10 years to 2037, KCS officials said in a press release. "[The] agreement and amendment reinforce our strong partnership with the Mexican government and our long-standing commitment to support Mexico’s railway network, which plays an essential role in promoting the country’s economic growth," said KCSM President and General Manager Oscar Augusto Del Cueto Cuevas.

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KCS pledges support to Red Cross for Ukraine relief efforts

Rail News Home Kansas City Southern 3/14/2022 Rail News: Kansas City Southern
image Kansas City Southern last week pledged $500,000 to the American Red Cross to support its global response to the Ukraine humanitarian crisis. KCS will also match employees' contributions to the American Red Cross for this effort, company officials said in a press release. "The entire world sees the escalating humanitarian crisis in Ukraine and we want to support the international effort to provide relief," said KCS President and CEO Patrick Ottensmeyer. "I encourage all of our employees, vendors, suppliers, customers and others across the world to join in these relief efforts.” The American Red Cross has deployed international crisis responders to Poland, Moldova, Hungary and Romania to provide humanitarian relief in support of the international Red Cross operation helping families who fled their homes. The trained crisis responders support on-the-ground relief efforts alongside local teams, including the Polish Red Cross and Moldovan Red Cross.

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KCS posts Q3 revenue increase despite traffic disruptions

Rail News Home Kansas City Southern 10/19/2021 Rail News: Kansas City Southern
image Kansas City Southern today reported third-quarter revenue of $744 million, a 13% year-over-year increase that resulted from mix, higher fuel surcharges and the strengthening of the Mexican peso against the U.S. dollar. Third-quarter operating expenses totaled $492.1 million, including $36.5 million in merger costs. Operating income was $251.9 million and the reported operating ratio was 66.1%. Net income was $156.5 million, or $1.71 per diluted share. When adjusted for merger costs and other factors, KCS posted operating income of $288.4 million, net income of $185 million and diluted EPS of $2.02. The adjusted operating ratio was 61.2%. Overall, third-quarter carload volumes fell 3% compared to the prior year primarily due to the following commercial impacts:
• auto plant shutdowns driven by a global microchip shortage;
• service interruptions at Lazaro Cardenas due to Kansas City Southern de Mexico right-of-way blockages resulting from teachers' protests; and
• increased regulation of refined fuel product shipments into Mexico resulting in supply chain disruptions. "We are encouraged that despite several commercial headwinds, our network is performing extremely well and we are delivering near record velocity and dwell,” said President and Chief Executive Officer Patrick Ottensmeyer in a press release. "Underlying industrial demand is strong, and KCS has maintained resources to prioritize customer service as volumes return to the network." As certain supply chain disruptions are resolved and the revenue environment improves, the Class I's network will be well-positioned to handle incremental volume while continuing to provide premium service to customers, he added.

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KCS announces EVP Sameh Fahmy will leave company

Rail News Home Kansas City Southern 10/14/2021 Rail News: Kansas City Southern
image Sameh Fahmy Photo – kcsouthern.com

Kansas City Southern yesterday announced that Sameh Fahmy, executive vice president of precision scheduled railroading, will leave the company by the end of the year. 

During his tenure at the railroad, which began in January 2019, Fahmy led the company through its transformational implementation of precision scheduled railroading (PSR), KCS officials said in a news release.

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KCS enlists Commtrex to boost supply-chain efficiency

Rail News Home Kansas City Southern 10/11/2021 Rail News: Kansas City Southern
image Kansas City Southern announced today that it has engaged Commtrex to enhance the visibility and connectivity of its network of more than 100 transload facilities in the United States and Mexico using Commtrex's platform. The new relationship with Commtrex comes at a time of increasingly complex and volatile global supply chains, capacity constraints, labor shortages, rising transportation costs and growing trade throughout North America due to the United States-Mexico-Canada Agreement, KCS officials said in a press release. Located in 19 U.S. and Mexican states, KCS' transload facilities handle food and agricultural commodities, bulk materials, chemicals, paper and forest products, steel and other metals. The Commtrex platform enables shippers to search for transload centers by location, commodities handled, services provided and other parameters to develop their freight-rail options. Close to one-third of Commtrex’s 2,300 members are rail-served shippers.

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KCS declares CP's latest merger proposal 'superior'

Rail News Home Kansas City Southern 9/13/2021 Rail News: Kansas City Southern
image Kansas City Southern yesterday announced that its board determined that Canadian Pacific's revised proposal constitutes a “company superior proposal” as defined in KCS’s merger agreement with CN. Under the terms of CP's proposal, each share of KCS common stock would be exchanged for 2.884 CP common shares and $90 in cash. In addition, holders of KCS preferred stock would receive $37.50 in cash for each share of KCS preferred stock held, according to a KCS press release. The proposal is binding on CP and may be accepted by KCS at any time prior to 5 p.m. EDT on Sept. 20. The transaction would be subject to approval by the stockholders of CP and KCS, receipt of regulatory approvals and other customary closing conditions. KCS has notified CN that it intends to terminate its merger agreement and enter into the definitive agreement with CP, subject to CN’s right to negotiate amendments to the merger agreement for at least five business days and the KCS board's further determination as to whether any such amendments would change the superior proposal designation. CP stands ready to execute a definitive merger agreement to create the first U.S.-Mexico-Canada railway to enhance competition in the North American rail network, CP officials said in a press release.

 "We are pleased to reach this important milestone and again pursue this once-in-a-lifetime partnership," said Keith Creel, CP's president and chief executive officer. "As we have said throughout this process, CP remains committed to everything this opportunity presents. This merger proposal provides KCS stockholders greater regulatory and value certainty. We are excited to move forward as we work toward making this perfect match a reality."

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BREAKING NEWS: KCS declares CP proposal 'superior,' will terminate CN deal

Rail News Home Kansas City Southern 9/12/2021 Rail News: Kansas City Southern
image Kansas City Southern today announced that its board has determined that Canadian Pacific's revised proposal constitutes a “company superior proposal” as defined in KCS’s merger agreement with CN. The KCS board made this determination after consultation with the company's outside legal and financial advisers, according to a KCS press release. Under the terms of CP's proposal, each share of KCS common stock would be exchanged for 2.884 CP common shares and $90 in cash. In addition, holders of KCS preferred stock would receive $37.50 in cash for each share of KCS preferred stock held. The proposal is binding on CP and may be accepted by KCS at any time prior to 5 p.m. EDT on Sept. 20. The transaction would be subject to approval by the stockholders of CP and KCS, receipt of regulatory approvals and other customary closing conditions. KCS has notified CN that it intends to terminate KCS's merger agreement with CN and enter into the definitive agreement with CP, subject to CN’s right to negotiate amendments to the merger agreement for at least five business days and the KCS board's further determination as to whether any such amendments would cause the CP proposal no longer to constitute a company superior proposal. CP stands ready to execute a definitive merger agreement to create the first U.S.-Mexico-Canada railway to enhance competition in the North American rail network, CP officials said today in a press release."We are pleased to reach this important milestone and again pursue this once-in-a-lifetime partnership," said Keith Creel, CP president and chief executive officer. "As we have said throughout this process, CP remains committed to everything this opportunity presents. This merger proposal provides KCS stockholders greater regulatory and value certainty. We are excited to move forward as we work toward making this perfect match a reality."

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BREAKING NEWS: Kansas City Southern to begin talks with Canadian Pacific

Rail News Home Kansas City Southern 9/4/2021 Rail News: Kansas City Southern
image Kansas City Southern today announced that its board has unanimously determined that the unsolicited proposal received from Canadian Pacific on Aug. 31 to acquire KCS in a cash and stock transaction valued by CP at $300 per KCS share could reasonably be expected to lead to a “company superior proposal” as defined in KCS’s merger agreement with CN. KCS intends to provide CP with nonpublic information and to engage in discussions and negotiations with CP with respect to CP’s proposal, subject in each case to the requirements of the CN merger agreement, KCS officials said in a press release. KCS remains bound by the terms of the CN merger agreement, and KCS's board has not determined that CP's proposal in fact constitutes a company superior proposal. In addition, KCS notes that there can be no assurance that the discussions with CP will result in a transaction, the press release stated. As previously announced on May 21, KCS entered into a merger agreement with CN, pursuant to which CN agreed to acquire KCS in a stock and cash transaction valued at $325 per KCS share based on the CN and KCS closing prices on May 12.

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KCS delays stockholder vote on CN merger plan

Kansas City Southern yesterday adjourned its special meeting for KCS stockholders to vote on the merger agreement with CN until Sept. 3.

All stockholders of record of KCS common stock and KCS 4% noncumulative preferred stock as of the close of business on July 1, 2021, will be entitled to vote their shares at the meeting, KCS officials said in a news release.

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KCS, Savage form partnership to open Louisiana railport

Rail News Home Kansas City Southern 8/18/2021 Rail News: Kansas City Southern
image Savage today announced a partnership with Kansas City Southern to construct a multicommodity railport with transload and rail-car storage capabilities in Mossville, Louisiana. Savage will own and operate the railport, which will be built on property leased from KCS at its Mossville rail yard. Savage's Mossville facility is expected to be operational by January 2022 and will provide a link in the supply chains of Lake Charles area refineries, chemical plants and other businesses, Savage and KCS officials said in a press release. Savage has a longstanding relationship with KCS. "We've provided rail and loading services for customers in the Lake Charles area for many years, and look forward to making a difference for even more businesses in southwest Louisiana," said Savage President and Chief Executive Officer Kirk Aubry. The Mossville railport is part of the growing Savage transload network of about 50 multicommodity, rail-connected terminals across North America, and the first developed in partnership with KCS. When completed, the railport will include more than 70 transloading spots —expanded from 40 existing spots — for moving chemicals, refinery products and other materials between trucks and rail cars. It will also feature 600 spots for rail-car storage. The railport will provide access to moving products into Mexico on KCS rail lines. "The Louisiana railport will provide additional rail capacity and new services for shippers in the Mossville and Lake Charles region, which will expand their supply chain choices and allow for more competitive shipping options," said KCS President and CEO Pat Ottensmeyer.

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KCS board backs CN merger proposal, cites possible shareholder meeting change

It didn’t take long for Kansas City Southern’s board to consider Canadian Pacific’s sweetened merger offer.

Just two days after CP presented the higher bid, KCS’ board determined it doesn’t constitute a “superior proposal” to CN’s competing bid and could not reasonably be expected to lead to a superior proposal. The board came to that conclusion following a “careful and thorough review” in consultation with outside financial and legal advisors, KCS officials said in a press release.

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Independent proxy advisor: KCS shareholders should support CN merger

Rail News Home Kansas City Southern 8/9/2021 Rail News: Kansas City Southern
image Kansas City Southern on Saturday announced leading independent proxy advisory firm Institutional Shareholder Services Inc. (ISS) has recommended that the Class I’s shareholders vote in favor of the proposed CN merger at a special stockholders meeting to be held on Aug. 19. ISS determined the premium, valuation and strategic rationale for the transaction are compelling. While Canadian Pacific — which also aims to acquire KCS — is soliciting votes against the CN-KCS merger, it has not provided KCS shareholders with any actionable alternative or one that bridges the divide between its initial offer and CN’s offer, ISS officials claim. “In voting to approve the transaction, shareholders would lock in the break fee. They would also advance the deal one step closer to completion,” ISS officials said in a press release. KCS leaders are encouraged that ISS supports its board’s unanimous recommendation that shareholders vote in favor of the combination. “In its report, ISS validates our belief that CN is the ideal partner for KCS to power the resurgence of North America’s industrial and agricultural corridors and enhance competition, and that this transaction is in the best interest of KCS and all of our stakeholders,” said KCS President and Chief Executive Officer Patrick Ottensmeyer. “We strongly urge [our] shareholders to follow the ISS’ recommendations and vote for the transaction.”  On May 21, KCS and CN entered into a definitive merger agreement under which KCS shareholders would receive $200 in cash and 1.129 shares of CN common stock for each KCS common share. After the transaction closes, KCS shareholders would own about 12.65% of the combined company.

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Kansas City Southern responds to CP proxy statement

Rail News Home Kansas City Southern 8/2/2021 Rail News: Kansas City Southern
image Kansas City Southern today responded to Canadian Pacific's filing last week of a preliminary proxy statement seeking votes against the CN-KCS merger proposal. In a prepared statement, KCS officials said that CP's filing "is part of an effort to defeat a transaction that offers KCS shareholders $50 per share more than CP was willing to offer." In May, CP decided not to take advantage of its five-business-day match right, per the terms of its initial merger contract, to compete with CN’s superior proposal. Since that time, CP has consistently criticized the CN-KCS combination, KCS officials said. KCS officials also noted that, even though CP claims in its latest filing that its "ready to re-engage with KCS," CP has not made a new proposal. "Nor did it commit to making one in the future," they said, adding that there can be no assurances that CP will make an offer or proposal to KCS. KCS continues to recommend that its shareholders vote in favor of the CN combination. KCS's full statement is available here.

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KCS posts revenue gain, net loss in Q2

Kansas City Southern posted second-quarter 2021 revenue of $749.5 million, a 37% increase from the same period a year ago. Overall, carload volumes were up 31% compared to the prior year.

KCS attributed the revenue increase primarily to higher volumes, a higher fuel surcharge and the strengthening of the Mexican peso against the U.S. dollar.

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KCS sets stockholder meeting date for CN merger vote

Rail News Home Kansas City Southern 7/8/2021 Rail News: Kansas City Southern
image Kansas City Southern has scheduled for Aug. 19 a virtual special meeting of stockholders to vote on the proposed merger with CN. All stockholders of record of KCS common stock and 4% non-cumulative preferred stock as of the close of business on July 1, 2021, will be entitled to vote their shares at the special meeting, KCS and CN officials said in a press release. As previously announced on May 21, under the terms of the agreement KCS stockholders will receive $200 in cash and 1.129 shares of CN common stock for each KCS common share, with KCS stockholders expected to own approximately 12.65% of the combined company. KCS' preferred stockholders will receive $37.50 in cash for each preferred share. Additional information regarding the combination can be found in the definitive proxy statement that has been filed with the U.S. Securities and Exchange Commission. The KCS board unanimously recommends that stockholders vote for the merger agreement with CN and the other proposals outlined in the definitive proxy statement. CN will acquire KCS shares and place them into a voting trust if such trust is approved by the Surface Transportation Board (STB). KCS stockholders would receive the merger consideration immediately upon the closing into CN’s voting trust, which is expected to be in the second half of 2021, the companies said. Following that step, the STB and other regulatory authorities would complete their review of CN's control of KCS. Upon approval, the completion of the transaction to take the KCS shares out of the voting trust is expected to take place in the second half of 2022, they said. CN's prospectus and KCS' definitive proxy materials can be found on the SEC's website. The proxy materials are being mailed to all stockholders eligible to vote at the special meeting. Meanwhile, Canadian Pacific issued a statement in response to CN's recent filing with the STB replying to the many comments opposing CN's proposed voting trust. "CN's reply doubles down on arguments for a voting trust that CP has already shown do not meet the board's public interest test and sweeps under the rug the many public interest costs associated with CN's proposed use of a trust," CP officials said in their statement, which can be read here.

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KCS lists 2020 sustainability achievements in new report

Rail News Home Kansas City Southern 7/2/2021 Rail News: Kansas City Southern
image Kansas City Southern yesterday released its 2020 sustainability report titled "For the Long Haul: Delivering Prosperity, Valuing People, Protecting the Planet." Available in the corporate responsibility section of kcsouthern.com, the report shows KCS in 2020: • improved its U.S. and Mexico consolidated frequency rate of reportable workplace injuries and illnesses by 27%;
• committed to do its part in the fight against climate change and partnered with the Science Based Target Initiative to set an ambitious carbon-reduction target. KCS has committed to reducing its scope 1 and 2 greenhouse gas emissions per million gross ton-miles at least 42% by 2034, from a 2019 base year;
• avoided the use of 21.2 million gallons of diesel fuel; this is an additional nearly 7 million gallons avoided compared to 2019 due to the implementation of fuel-efficient technologies; and
• held 24 diversity, equity and inclusion roundtable sessions across the United States and Mexico with its President and Chief Executive Officer Patrick Ottensmeyer and more than 200 participants. The forum provided employees a space to share their views on workplace equity, inclusion and opportunities for KCS improvements. The report follows the Global Reporting Initiative's latest standards for disclosing governance, economic, social and environmental topics and is in alignment with the Sustainability Accounting Standards Board and Task Force on Climate-related Financial Disclosures frameworks. The frameworks provide for the disclosure of measurable data and specific information related to sustainability, KCS officials said in a press release.

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CN-KCS: Merger would offer choices to grain shipper

Rail News Home Kansas City Southern 6/25/2021 Rail News: Kansas City Southern
image CN and Kansas City Southern today highlighted what they describe as the benefits realized by grain customers, including farmer-owned grain co-operatives, through CN’s open gateways commitment in the CN-KCS combination. These stakeholders, including agricultural customers in the upper midwestern United States, would benefit from a choice of routes and competitive rates, better service and innovation resulting from the competition for their business, the two Class Is said in a press release. Their statement comes a day after Canadian Pacific announced that shippers of grain and other agricultural products across North Dakota, South Dakota and Minnesota have submitted letters to the Surface Transportation Board (STB) opposing CN's and KCS's combination, its use of a voting trust, or both. The letters describe how a potential CN-KCS combination and its proposed use of a voting trust would see reduced options for agricultural shippers in the Upper Midwest leaving them fewer direct competitive options, and eliminating the new network of shipping options a CP-KCS combination would create, CP officials said in a press release. Meanwhile, CN President and Chief Executive Officer JJ Ruest and KCS President and CEO Patrick Ottensmeyer yesterday co-authored an op-ed published in The Hill in which they explained why they believe the CN-KCS merger would supply critical infrastructure to shorten supply chains. The full Ruest/Ottensmeyer op-ed can be read here.

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Merger pros and cons: CN, KSC, CP tout letters that support their own positions

Rail News Home Kansas City Southern 6/21/2021 Rail News: Kansas City Southern
image Canadian Pacific today announced that more than 80 additional stakeholders have filed statements with the Surface Transportation Board (STB) expressing concerns about CN and Kansas City Southern's combination, its use of a voting trust or both. The latest statements bring the total opposed to more than 330, CP officials said in a press release. Together, more than 1,050 letters have been filed in support of CP's proposed combination with KCS or in opposition to the CN proposal. The letters highlight the extensive risks the proposed CN-KCS voting trust poses to competition by reducing shipper options, CP officials said. Stakeholders also expressed strong concerns about the likelihood of reduced service quality and infrastructure investments as a result of the proposed merger. Meanwhile, last week CN and KCS announced that an additional 100 letters in favor of their proposed combination were filed with the STB, bringing the total number of support letters that CN and KCS have received to greater than 1,500. Of the 100 or so filed last week, 90 of the letters support CN's and KCS's request that the STB approve their proposed voting-trust agreement.

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CN, KCS respond to STB request for more documents

Rail News Home Kansas City Southern 6/16/2021 Rail News: Kansas City Southern
image CN and Kansas City Southern yesterday announced that they jointly filed certain documents requested by the Surface Transportation Board (STB) to enable the STB to review the voting trust proposal as part of the CN-KCS merger agreement. With this filing, CN and KCS are one step closer to creating their merged railway. CN and KCS look forward to the STB’s review and are confident that their voting trust will be approved, officials with both organizations said in a press release. In response to the STB’s request for information about KCS’s pre-existing capital allocation policy, CN and KCS also submitted to the STB a statement from KCS Chief Financial Officer Michael Upchurch. In his statement, Upchurch emphasized the financial strength of KCS and its capital investment plans during the trust period. The STB filing, as well as additional information about CN’s pro-competitive combination with KCS, is available at www.ConnectedContinent.com. Meanwhile, Canadian Pacific announced yesterday that North America's largest railroad operating union, SMART-Transportation Division (SMART-TD), has submitted a letter urging the STB to reject CN’s proposed use of a voting trust in its KCS merger agreement. In contrast, the SMART-TD letter stated of CP’s proposed combination with KCS: “We anticipate growth in both rail businesses and jobs for SMART-TD members." CP continues to make a public case for its proposal to merge with KCS, which initially agreed to combine with CP but then pulled out of the pact to pursue a merger agreement with CN

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