A Mexican district court on September 17, 2013, rejected an attempt by Grupo Mexico SAB de CV (GMexico) to intervene in a personal lawsuit between U.K. investment firm Infund LLP (Infund) and Germán Larrea Mota Velasco (Larrea), CEO and controlling shareholder of GMexico and No. 40 on Forbes 2013 Worlds Billionaire List. A May 2013 judicial ruling freezing in excess of seven percent of GMexicos equity remains in force, putting at risk Larreas control of the $24 billion Mexican conglomerate.
Counsel for Larrea is Juan Pablo Silva, son of Chief Justice of the Mexican Supreme Court Juan N. Silva Meza, while counsel for Infund is the Mexico City law firm Rios-Ferrer, Guillén-Llarena, Treviño y Rivera, S.C.
Infunds suit alleges that Larrea breached a commercial commission contract when he refused to deliver GMexico securities for which Infund paid USD $75 million. A key component of a broader $230 million capital raise by GMexico, Infund sought to buy approximately 65 million Series B, Coupon 5 shares that only a select group, including Larrea and his familys trusts, were eligible to initially purchase. Despite Infunds attempts to settle the trade, GMexico public filings from 2006 onward confirm that Larrea retained the shares in his own accounts. Those disputed securities are now worth more than USD $2 billion, which represents seven percent of GMexicos outstanding equity and is greater than Larreas controlling stake in the firm.
Larrea has served as GMexico CEO since 1994. The global conglomerate operates railroads and mines throughout the U.S. and Latin America through subsidiaries including Americas Mining Corp (AMC), ASARCO LLC, and Southern Copper Corp. AMC filed a registration statement in London in August with the hopes of an initial public offering (IPO). That IPO has since been called off, while the personal lawsuit against its most senior executive continues to move forward.
We are happy that the courts in Mexico agree that only Germán Larrea can answer for this breach of contract, said Infund spokesman José Antonio Marván Lizardi. Unless Grupo Mexico is Larreas alter ego, then Grupo Mexico is not a defendant here. Yet Grupo Mexico attempts to stymie the judicial process by intruding on behalf of its CEO.