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Azteca investors sue after debt review

Suit seeks to recover damages due to probe

MEXICO CITY– TV Azteca shareholders have filed suit against the net’s majority owner, Ricardo Salinas Pliego, claiming damages related to a debt transaction under review in the U.S. and Mexico.

The suit, filed by three firms in U.S. District Court for the Southern District of New York on Monday, seeks to recover damages due to the probe, which has hit Azteca stock prices.

After the announcement, shares dropped to $7.47 on the Big Board, a 52-week low that put the stock down nearly 24% from its Dec. 23 close of $9.80 per share.

Claim is the latest blow for Salinas, who has been in the spotlight since late December when Azteca’s U.S. law firm resigned, signaling possible wrongdoing related to a debt restructuring of telco Unefon in 2002. Unefon is part of Grupo Salinas, Salinas Pliego’s holding company.

Unefon had received a $325 million loan from Nortel Networks for the restructuring, which it later repaid. A privately held company, Codisco, negotiated the deal and purchased the loan at the discounted price of $107 million.

Later it was revealed Salinas and Moises Saba, chairman of Unefon, were the owners of Codisco, a relationship Salinas publicly denied last summer. The pair might have made as much as $218 million on the transaction, a gain they did not report.

Salinas and Azteca “denied any affiliation with a ‘white-knight’ group of investors that had saved Unefon from bankruptcy,” the class suit announcement from Cauley Geller Bowman & Rudman, LLP reads. “Then, on Jan. 9, defendants stunned the markets by admitting that the ‘white-knight’ investors were in fact Salinas and Saba.”

Shortly after Azteca’s announcement, the Securities and Exchange Commission, as well as Mexico’s securities agency, began formal investigations.

Earlier this month, holders of bonds in Iusacell, a company partially owned by Grupo Salinas, sued to prevent restructuring of $150 million in overdue 10% notes, identifying the Unefon case as a factor in their decision to sue.

As well as Cauley Geller, new suit was filed by Schiffrin & Barroway LLP and Charles J. Piven P.A. The class covers buyers of TV Azteca stock between Oct. 6 and Jan. 7, and will close on March 24.

Azteca, in a release related to the new shareholder suit, said it “denies wrongdoing and intends to vigorously defend these actions.”

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