LONDON--(EON: Enhanced Online News)--UK investment firm Infund LLP (Infund) has filed a civil lawsuit in Mexico against Germán Larrea Mota Velasco (Larrea), CEO and controlling shareholder of Grupo Mexico, SAB de CV (GMexico), and as a result of the lawsuit the court has frozen seven percent of GMexico’s outstanding equity pending conclusion of the litigation.
“Without Infund’s subscription and payment through its commission agent Larrea, Grupo Mexico’s capital raise would have failed”
The suit alleges Larrea, No. 40 on “Forbes 2013 World’s Billionaire List” and third richest man in Mexico, breached a “commercial commission contract” when he refused to settle a 2003 securities purchase by Infund for USD $75 million in GMexico Series B, Coupon 5 shares. The disputed securities have appreciated in value to more than USD $2 billion, representing seven percent of GMexico’s outstanding equity and greater than Larrea’s 51 percent controlling stake in the firm. Global conglomerate GMexico operates railroads and mines throughout Mexico, the United States and Latin America through subsidiaries including Americas Mining Corporation, ASARCO LLC, and Southern Peru Copper Corporation.
Securities filings show that in 2003, in an attempt to ease a severe liquidity crunch that was a result of weak global copper demand, GMexico sought to raise USD $230 million through a limited securities offering. Infund, which was managed at the time by Hector Garcia Quevedo, longtime confidant to Larrea family patriarch Jorge Larrea, sought to subscribe for approximately 65 million GMexico Series B Coupon 5 shares via a "commercial commission contract" that mandated a USD $75 million advance by Infund to Larrea and a simultaneous transfer to Infund of the securities. However, records show the younger Larrea kept the shares in his own accounts despite Infund's attempts to settle the trade.
“Without Infund’s subscription and payment through its commission agent Larrea, Grupo Mexico’s capital raise would have failed,” said José Antonio Marván Lizardi, Infund’s representative in the matter. “The facts are straightforward, Infund timely fulfilled its USD $75 million funding obligation as part of Grupo Mexico's vital capital raise but never received the shares for which it paid. It is time for this trade to be settled.”
Counsel in the case is the Mexico City law firm Rios-Ferrer, Guillén-Llarena, Treviño y Rivera, S.C.