Kansas City, Missouri, May 1, 2012. Kansas City Southern (“KCS”) (NYSE: KSU) announced today that its wholly owned subsidiary, The Kansas City Southern Railway Company (“KCSR” or “the Company”), a Missouri corporation, will redeem all of the $100.3 million aggregate principal amount of its 8% Senior Notes Due 2015 (the “Notes”) outstanding on June 1, 2012 (the “Redemption Date”). The redemption price is 104.000% of the principal amount of the Notes to be redeemed. As June 1, 2012 is an interest payment date there will be no accrued and unpaid interest on the Redemption Date. U.S. Bank National Association is the trustee for the Notes.
KCSR intends to finance the redemption of the Notes with $100 million of proceeds from the $275 million Term Loan A-2 (“TLA-2”) completed by KCSR in February 2012 plus cash on hand. Today’s announced redemption follows the repurchase and retirement of approximately $175 million aggregate principal amount of the Notes in connection with a tender offer completed in February 2012. KCSR financed the February redemption with $175 million of proceeds from the TLA-2 plus cash on hand. By refinancing the entire $275 million principal amount of the Notes with the proceeds of the TLA-2, which carries an interest rate of 1.25% over the London Interbank Offered Rate, KCSR expects to save approximately $17 million annually in pre-tax interest expense.
Headquartered in Kansas City, Mo., KCS is a transportation holding company that has railroad investments in the U.S., Mexico and Panama. Its primary U.S. holding is The Kansas City Southern Railway Company, serving the central and south central U.S. Its international holdings include Kansas City Southern de Mexico, S.A. de C.V., serving northeastern and central Mexico and the port cities of Lázaro Cárdenas, Tampico and Veracruz, and a 50 percent interest in Panama Canal Railway Company, providing ocean-to-ocean freight and passenger service along the Panama Canal. KCS’s North American rail holdings and strategic alliances are primary components of a NAFTA Railway system, linking the commercial and industrial centers of the U.S., Mexico and Canada.
This news release contains forward-looking statements that are not based upon historical information. Readers can identify these forward-looking statements by the use of such verbs as “expects,” “anticipates,” “believes” or similar verbs or conjugations of such verbs. Such forward-looking statements are based upon information currently available to management and management’s perception thereof as of the date of this news release. However, such statements are dependent on and, therefore, can be influenced by, a number of external variables over which management has little or no control, including: domestic and international economic conditions; interest rates; the business environment in industries that produce and consume rail freight; competition and consolidation within the transportation industry; fluctuation in prices or availability of key materials, in particular diesel fuel; labor difficulties, including strikes and work stoppages; credit risk of customers and counterparties and their failure to meet their financial obligation; the outcome of claims and litigation; legislative and regulatory developments; political and economic conditions in Mexico and the level of trade between the United States and Mexico; changes in securities and capital markets; disruptions to the Company's technology infrastructure, including its computer systems; natural events such as severe weather, hurricanes and floods; acts of terrorism or risk of terrorist activities; war or risk of war; and other factors affecting the operation of the business of KCS and KCSM. More detailed information about these factors may be found in filings by Kansas City Southern and Kansas City Southern de México, S.A. de C.V. with the Securities and Exchange Commission, including their most recent Annual Reports on Form 10-K and subsequent Quarterly Reports on Form 10-Q. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. KCS and KCSM are under no obligation to, and expressly disclaim any such obligation to, update or alter their forward-looking statements, whether as a result of new information, future events or otherwise.