Mexican b'caster weighs Wall Street walkout
MEXICO CITY — With an SEC fraud probe hanging over it, beleaguered Mexican broadcaster TV Azteca will hold an emergency stockholders meeting on June 1 to mull delisting from the New York Stock Exchange as Ricardo Salinas Pliego fights to hang on to the top job.
Two related concerns, telco Iusacell and home appliance retailer Elektra, are also weighing the dramatic move.
The news was a shock to investors of the companies, all majority controlled by Salinas, who is expected to go on trial in U.S. District Court in June for alleged fraud. The case involves a 2003 debt refinancing that netted Salinas and TV Azteca board member Pedro Padilla nearly $220 million in undisclosed profits.
Shares in all three companies took hits on the NYSE and the Mexican Bolsa on the news.
A spokesman for the net said delisting would avoid costs incurred in complying with “excessive” SEC oversight in the wake of the Enron and Worldcom scandals.
Analysts, however, scoffed at the explanation.
Under SEC rules, if Salinas is convicted of fraud he could lose his right to direct any company publicly traded within the U.S.
But by withdrawing the three companies, he would not have to step down.
Salinas’ chances of avoiding conviction appear slight. Last week Azteca and several of its execs were slapped with $2.4 million in fines by Mexico’s securities regulator for fraud in the same case being investigated in the U.S.
The delisting proposal sets up a confrontation between Salinas and other holders of stock in his companies, who are increasingly vociferous over the terrible hit they have taken in recent months. TV Azteca is down more than 20% on the year.
Many are calling for Salinas to step down.
Salinas has the majority of voting stock in Azteca, Iusacell and Elektra, however, so the delisting proposals will probably pass.
Azteca began listing itself on the Spanish Latibex market in November, a move that may have been in anticipation of a possible NYSE delisting.
In related news, shareholders in the telco whose $325 million debt was refinanced by Salinas, setting off the fraud probe, voted on Monday not to delist from the Mexican Bolsa market. As Salinas controls only 46.5% of Unefon, his motion was overruled.