MEXICO CITY — Shares in beleaguered TV Azteca, embroiled in a securities probe, fell 20% on Monday after key board members James Jones and Gene Jankowsky abruptly resigned late Friday.
The news comes about five months after Mexico’s second-largest net announced that it had hired independent council to investigate its compliance with Securities and Exchange Commission regulations related to transactions involving debt refinancing for its Unefon telcom unit last summer.
Jones, former U.S. ambassador to Mexico and chair-CEO of the American Stock Exchange, was named by Azteca in early January to head a special internal-review committee to examine the case.
Jankowsky, formerly president of CBS Broadcasting Group, was also on that investigation panel, along with three other Azteca directors.
Unefon refinanced $325 million in debt with a loan from Nortel Networks. The loan was arranged through a third-party company, Codisco, which had purchased it for a deep discount — $107 million. Unefon later repaid the debt at full price, netting a $218 million profit for Codisco.
It later emerged that Azteca chairman Ricardo Salinas, along with a partner, pocketed that $218 million difference without notifying shareholders, a possible violation of securities laws in the U.S. and Mexico.
Since then, both the SEC and Mexico’s equivalent are investigating Salinas and Azteca for civil and criminal breaches including fraud.
The pair’s abrupt resignation does not bode well for Azteca.
Azteca declined to comment on the news, but investors reacted negatively and company shares dropped $1.58 to $7.12 per share.
The slide picks up a trend that had been reversed by positive fourth- and first-quarter results in recent months.
In the month after the disclosure of Azteca’s problems, shares fell precipitously, accelerated by the fact that U.S. law firms representing people who bought Azteca stock between Oct. 6 and Jan. 7 have filed class-action complaints against the net.
Azteca is spinning off Unefon, which last week applied for registration with the Mexican Stock Exchange.