Ricardo Salinas Pliego’s Total Play Controversy: Impact on Foreign Investors and Transparency Concerns

2024-02-28 17:05:17

El Imparcial / Mexico / Salinas Pliego

They accuse the owner of the Internet company of giving preference to local investors and for lack of transparency with foreign creditors.

The Mexican businessman reached an agreement with private Mexican investors that upset his foreign creditors.

By Pablo Rubio & Reforma

February 28, 2024

MEXICO CITY.- Foreign investors and creditors of Total Play, a Mexican internet service provider, were affected last week following its owner, Ricardo Salinas Pliego, reached an agreement with local holders, leaving them in an unfavorable situation in the event of company insolvency, Bloomberg reports.

The company reportedly reached a private agreement with a group of Mexican investors, led by Grupo ICEL, a higher education operator in Mexico, to exchange its bonds for new secured bonds maturing in 2028. This action took holders by surprise. of Total Play bonds maturing next year.

Why did Salinas Pliego seek an agreement with Mexican investors?

Total Play bonds were already among the worst performers in emerging markets this year, and the announcement of the swap caused a further drop in their value, reaching a low of 50 cents on the dollar. The company later pledged to offer a similar deal to global bondholders, with covered bonds offering higher coupons, helping to recoup some of the losses, with prices stabilizing around 54 cents on Tuesday.

Balanz analyst in Buenos Aires, Juan Djivelekian, pointed out that this agreement highlights the company’s preference for local investors and the lack of transparency with international holders.

This highlights the company’s preference for non-traditional local investors and its lack of transparency with international holders,” Juan Djivelekian, an analyst at Balanz in Buenos Aires, points out in a note.

Who are Total Play’s main creditors?

Non-bank lender Grupo ICEL has become a crucial creditor for Total Play, now representing 43% of total debt, compared to 25% previously. Additionally, secured debt now makes up 66% of the company’s debt, up from 56% at the end of the third quarter, according to Eduardo Nieto, a credit analyst at JPMorgan & Chase.

Despite the possibility that the rest of the bonds will be exchanged on favorable terms, Nieto warns of necessary caution, considering that the higher cost of debt might result in haircuts and worse conditions for future agreements with a broader base of holders. .

While there is a possibility that the remaining 25 might be redeemed on favorable terms, we remain cautious as we believe the higher cost of debt might lead to a haircut and worse conditions for a future deal with the broader base of holders. ” indicates Nieto.

So far, representatives from Salinas, Total Play and Grupo ICEL have not responded to Reforma’s requests for comment.

This agreement has fueled concern among Total Play’s international creditors, who face an uncertain situation due to the preference shown by the company towards local investors and the opacity in its financial actions.

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