Unefon loan probe hurts Azteca rating

Outlook down as investigation continues

MEXICO CITY — Standard & Poor’s cut the outlook on TV Azteca, Mexico’s second-biggest broadcaster, from stable to negative on Monday as a result of an ongoing probe into loan transactions by owner Ricardo Salinas Pliego.

The Mexican securities regulators’ inquiries focus on the restructuring of debt owed by Unefon, a wireless unit controlled by Salinas’ holding company, Grupo Salinas, to its equipment vendor Nortel Networks Corp.

Meanwhile, bondholders in Grupo Iusacell, a Mexican cellular phone company whose largest shareholder is Salinas, have filed suit in New York State Supreme Court over the payment of $150 million in 10% notes.

Suit is the latest financial pressure placed on Salinas as increasing doubt arises over the Unefon transactions.

Last week, it was revealed that the U.S. Securities & Exchange Commission is investigating the restructuring, which included a $325 million loan from Nortel that was bought at a discount and then repaid at full value by Unefon.

Earlier this month, TV Azteca announced that Salinas and Unefon chairman Moises Saba may have been behind a company called Codisco that helped in the refinancing and may have rendered a $218 million profit for the pair. That figure was not disclosed at the time, a possible securities violation.

In late December, TV Azteca’s U.S. law firm, Akin Gump Strauss Hauer & Feld, dropped the broadcaster as its client, expressing concerns about its financial dealings.

Noteholders in Iusacell, which is not directly involved in the Unefon transactions, are demanding the repayment of $150 million in 10% notes, which expired in July, and that Iusacell desist in what have been repeated attempts to restructure that debt. They also expressed concerns over the Unefon investigations.

The bondholders are represented in their suit by Manatt, Phelps and Phillips.

TV Azteca had no comment on the bondholders’ suit.

The unfolding financial scandal has had a negative effect on the stock of TV Azteca and other Grupo Salinas companies, including Banco Azteca. During the first two weeks of this month, Azteca stock fell nearly 20%, although it has rebounded slightly.

“Unfortunately, TV Azteca’s stock price is suffering again from something that is not related with the company’s core business,” Francisco Rivero, an analyst at Santander Investment, told Reuters.

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