News USA The ghost of bankruptcy haunts the millionaire Ricardo Salinas Pliego: the shares...

The ghost of bankruptcy haunts the millionaire Ricardo Salinas Pliego: the shares of TV Azteca plummet 30%

Ricardo Salinas Pliego during an event on October 12, 2022 in Mexico City.Moisés Pablo Nava (Dark Room)

The third richest man in Mexico, Ricardo Salinas Pliego, lives low hours. A handful of creditors in the US requested this Tuesday the involuntary bankruptcy of TV Azteca, one of the pillar companies of the Mexican magnate, due to the non-payment of the performance of a bond for 400 million dollars issued by the company in 2021. “We will attend firmly all legal processes, knowing that we have the ethical and legal reason, and that the judicial authorities will confirm it,” the company reported in writing. The legal conflict, however, has echoed in the value of its actions. This Wednesday the titles of Tv Azteca closed the day at 48 cents, a drop of 31.4% compared to the previous day, when its value was around 72 cents. The sharp drop caused the Mexican Stock Exchange to suspend the listing of the paper for a couple of minutes to carry out a volatility auction. After the announcement of the legal conflict, the price of the titles have only fallen.

The company has emphasized, in a statement to the Mexican Stock Exchange, its willingness to dialogue with the group of bondholders for some 63 million dollars that have requested the bankruptcy of the firm before a New York court. TV Azteca has 20 days to respond to the court. The disagreement between this group of creditors and Salinas Pliego has its origins in August 2017, when the telecommunications company issued a bond for 400 million in the United States, however, in 2021, Tv Azteca announced the suspension of the interest coupon payment due to insolvency problems. Two years later, and given the continued non-payment, those affected have decided not to wait any longer and take a step forward by bringing the case before the US courts.

Benjamín Álvarez, an analyst at CI Banco, explains that the creditors’ request for TV Azteca to declare bankruptcy is a resource for the complainants to negotiate and recover some of their money. “The intention of the creditors is not to seek the bankruptcy of the company, but to attract attention in order to reach an agreement,” he says. The perspective from the financial sector is that the volatility in the value of the titles will continue until an agreement is reached. Although the company is now suffering a relevant bump, its historical lows date from October 2020, in the midst of a pandemic, when its shares traded below 30 cents.

debt problems

The decline of TV Azteca can be seen in the figures. Until September 2022, the company reported a debt of more than 9,800 million pesos, about 528 million dollars. From July to September of that year, the firm’s sales fell 2% compared to the same period of the previous year and its profits were only 4 million pesos, a collapse compared to the 102 million pesos in the third quarter of 2021. Although Most of the companies listed on the BMV have already published their financial information at the end of 2022. Tv Azteca has postponed this report, arguing that it is still “in the process of being prepared.”

The end of this story, however, is still far away and will depend on the alternatives that Grupo Salinas itself chooses to face this demand. Due to the burden of this debt, the debt market for TV Azteca seems to be closed, so the most viable option to deal with this demand, according to experts, will be an injection of capital from the owners of the company. or take the trial to its final consequences.

With a fortune of more than 10.9 billion dollars, according to Bloomberg, Salinas Pliego is one of the most controversial magnates in Mexico. Heir to his family’s furniture and appliance retail business through Elektra and Salinas Rocha, in the 1990s he entered the media sector through the front door when he won the concession to operate TV Azteca. Years later, he diversified his portfolio by creating Banco Azteca. In recent years, he has also expanded his range to Total Play, the business arm that offers high-speed internet, through a fiber optic business.

Far from refusing the spotlight, Salinas Pliego seems to seek it out. The 67-year-old Mexican tycoon shares daily with his more than 1.2 million followers on Twitter posts of his trips on his planes and helicopters, at the same time offering business advice and launching harsh attacks against Morena politicians, writers and journalists . The financial turbulence that is going through one of the pillars of his emporium, Tv Azteca, has not abated the controversial owner of Grupo Salinas, who at noon this Thursday has released the following message along with a video with panoramic views of the capital: “For my millions of followers, I share the beautiful view of the south of CDMX… and remember, my friends, that while the dogs bark, it means that we are flying”. While the businessman flies over the skies of Mexico City, the shares of one of his most iconic companies are already touching the ground.

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