Two investment funds, due to TV Azteca debt, ask Mexico for 219 million dollars

The international lawsuit, filed on August 11, 2023, has its origin in the $400 million bonds maturing in 2024 that TV Azteca obtained in 2017 from investment funds. The Mexican company was committed to making semiannual payments with interest, but only made six. Through a statement in February 2021, the television station explained that the pandemic affected its financial statements, which complicated the payment of its obligations. The company added that it would reorganize its debt with investors to defer bond payments.

Both Cyrus Capital Partners and Contrarian Capital Management gave TV Azteca a 30-day period for late interest payments. However, the deadline expired and on March 22, 2021, a notice of non-compliance was presented to the Mexican company.

“Since then (February 2021), TV Azteca has not met all other required semiannual interest payments. And after months of fruitless negotiations with TV Azteca to resolve its multiple and growing default events, investors decided to prematurely mature the $400 million bond due in 2024,” details the document to which Expansión had access.

Expansión requested a position from TV Azteca on the issue, but said it could not not comment and adheres to what was stated in its press releases.

The television station, in a message issued on August 8, 2022 to the Mexican Stock Exchange (BMV), confirmed this situation by ensuring that it had received the notice from investors and reiterated “its commitment to dialogue to reorganize liabilities with investors.” of bonds”. As of June 2024, the company has not settled the debt.

The company obtained an injunction from the Superior Court of Justice of Mexico City in September 2022, which contains measures to protect itself from legal actions by both investment funds, which include maintaining the bond contract in its terms agreed in 2017, avoiding payments while the World Health Organization (WHO) maintains the covid-19 pandemic status and prohibit legal actions against TV Azteca for non-payment of bonuses.

The WHO decreed the end of the health emergency on May 5, 2023, but the television station assured that this resolution “has no effect on the case in question, since the measures dictated were about their effects, not their duration,” it said. TV Azteca on May 15 of last year to Expansión via written communication.

Experts consulted by this medium said that at that time the company would have requested immediate modifications once the WHO declared the pandemic over.

The move prevents Cyrus Capital Partners and Contrarian Capital Management from taking legal action over bond defaults.

Three years after the precautionary measures to avoid payment, Cyrus Capital and Contrarian Capital assure that the debt of businessman Ricardo Salinas Pliego’s company currently amounts to 488 million 623,000 dollars, of which 219 million, 050,000 dollars correspond to American investors.

Francisco Franco, expert in international arbitrations and partner at the Baker McKenzie law firm, explained that the amount requested by the investment funds is consistent with what international arbitrations stipulate, which is “the payment of damages based on a standard of how much you would have gained if the illegal act had not existed”, that is, the amount that the investors have requested plus compensation for the expenses of the arbitration procedure.

The claim of investment funds towards the Mexican State due to ‘denial of justice’, that is, that as a foreign investor neither the judiciary nor the State took care of your investment, is uncommon in international arbitrations and can be complex for plaintiffs prove their accusation.