As Mexican billionaire Carlos Slim Helu continues his buying spree of large stakes in distressed U.S. companies, commentators have started to question the possible impact of his expanded influence on U.S. business and politics. 

In the last year, Slim, through his family members and affiliated companies Banco Inbursa and Inmobiliaria Carso, has acquired:

- $250 million of six-year notes of The New York Times (NYSE: NYT) bearing interest at 14% per annum coupled with warrants convertible into common shares (this is in addition to the $128 million of NYT common stock Slim bought in September 2008 and representing 6.4% of NYT common stock; after the exercise of the warrants Slim’s NYT stake would rise to 17%);

- A 18% stake in luxury goods retailer Saks, Inc. (NYSE: SKS), which prompted the company’s board of directors to enact anti-takeover measures (rumors have suggested Slim is interested in the Saks’ real estate holdings); and

- A $150 million stake in Citigroup common stock (NYSE: C), which aroused speculation that Slim would seek to take over Citigroup’s Mexican subsidiary Banamex; Slim promptly denied interest in Banamex.

Andres Martinez, a Mexican native and journalist, suggested that Slim’s investment could pose serious conflict of interest problems for the NYT that could threaten its journalistic integrity. 

At this juncture, Mr. Martinez’s view seems to be a stretch.  Even after Slim exercises his warrants to acquire 17% of NYT common stock, Slim will have no representation on the NYT board, and no special voting rights.  The Ochs-Sulzberger family owns 19% of the company, which it controls through a special class of supervoting shares. 

The view of Armand Peschard-Sverdrup, a senior associate of the Center for Strategic and International Studies, is more on point: ”by having a stake in the New York Times, [Slim is] basically projecting himself as a powerbroker in this country, regardless of how his investment does.”  His investment in NYT, which yields a 14% annual return, appears that it will do very well.

The Mexico Institute and the Woodrow Wilson International Center for Scholars at Princeton have launched a new website/blog called The Mexico Portal, which according to the site, “provides the most comprehensive and timely news, analysis and studies on Mexico.  It covers a wide range of critical issues, including migration, security, the economy, development, energy, and elections.”

“We hope that The Mexico Portal helps the U.S. public follow events that occur in Mexico and in the Mexican community in the United States, as well as permit access to new studies, articles and reports that explore the significance of those issues,” said Andrew Selee, director of the Mexico Institute at the Woodrow Wilson International Center for Scholars, in a press release cited in a Sentido Comun report.

The Mexico Portal is a welcome addition to the growing number of Mexican-related news and information sites.

U.S. journalist resident in Mexico Jeremy Schwartz provides a refreshingly clear and insightful view of the reality of traveling in Mexico in a recent post on his Uncovering Mexico Blog. 

He writes: “While there are certainly some failed cities – I would never tell loved ones to go anywhere near Ciudad Juarez or Tijuana or Culiacan – most of the country is still stable and peaceful.  As violent as the drug war has become, its victims are still overwhelmingly connected to the cartels.  Few innocents are caught in the cross-fire.  I wouldn’t necessarily recommend a sightseeing trip to certain border towns or through the remote mountains of the Sierra Madre, but tourists should feel comfortable booking a trip to places like Puerto Vallarta or Oaxaca or Veracruz.

…

Viewing Mexico as an ungovernable chaos is to make a caricature of this vast, complex country.  As I told my friends and family, it can prevent you from enjoying the magic that still courses through Mexico’s veins.”

Amen.

I recently assisted my colleagues John Rogers and Mary Rose Brusewitz in the preparation of a paper entitled “The Financial Crisis and Implications for U.S.-Mexico Bankruptcies and Restructurings“, which was published in Latin American Law & Business Report. 

On January 15, 2009, John and Mary Rose will join a panel discussion at the U.S.-Mexico Chamber of Commerce in New York, in which they will discuss aspects of the paper and cross-border restructurings amid the current financial crisis.  The panel discussion is part of an event hosted by the U.S.-Mexico Chamber called Corporate Restructuring and Distressed Markets in Mexico.

Kansas City Southern (NYSE: KSU) will continue to invest in Mexico through its Mexican subsidiary, Kansas City Southern de Mexico, S.A. de C.V. (KCSM), despite the global economic recession, according to a report at mexicobiznews.com. 

KCSM, which expects to be moderately affected by the financial crisis, anticpates that the new railway facilities at the Lazaro Cardenas Terminal, a deepwater port located in the State of Michoacan, will increase rail cargo volumes, the report said. 

In June 2006, KCS announced that it would provide daily service from Larazo Cardenas, San Luis Potosi, and Monterrey, Mexico to the southeastern U.S. markets via Jackson, Miss., with connecting service to Atlanta, Ga.  KCS acquired a controlling stake in Transportacion Ferroviaria Mexicana (TFM) in April 2005, enabling it, TFM, and The Texas Mexican Railway Company to create a single 1,300 mile rail system under common ownership connecting the midwestern United States, central Mexico, and Mexico’s Pacific seaports, according to the Freightdawg.com blog.

The Lazaro Cardenas Terminal is managed by Hutchison Port Holdings.

On January 15, 2009, the U.S.-Mexico Chamber of Commerce in New York will host an event entitled Corporate Restructuring and Distressed Markets in Mexico.

The event includes a keynote speech by Luis Manuel Mejan, Director General of the Mexican Federal Institute of Commercial Insolvency Specialists (IFECOM), and a panel discussion led by my Strasburger & Price colleagues John Rogers and Mary Rose Brusewitz, and Steven Kargman, President of Kargman Associates, a restructuring advisory firm.

More information is available here.

Mexico’s senate approved a bill giving a government regulator authority to order pension funds to modify investment portfolios if they are judged to be too risky, according to a Bloomberg report.  The bill now goes to the lower house of Congress.

The cover story in the December 22, 2008 issue of Forbes titled “The Next Disaster” offers a bleak view of the challenges facing Mexico amid rising social violence in the wake of Calderon’s crackdown on the drug trade and economic recession in the U.S., Mexico’s main trading partner. 

The title of the article, which is probably good for magazine sales, and its subject matter, contrasts sharply to comments in the same Forbes issue by Mexican billionaire Ricardo Salinas Pliego, who recently purchased a majority stake in ailing retailer Circuit City, Mexican Ambassador to the U.S., Arturo Sarukhan, and U.S. Ambassador to Mexico, Tony Garza Jr., all of whom were interviewed in adjacent columns. 

Salinas, having lived and profited through Mexico’s various crises, was not improbably sanguine about Mexico’s prospects, commenting: “I have been through so many crises.  This is just one.  And I’ve seen worse.”  Ambassador Sarukhan emphasized Mexico’s progress in rooting out corruption in government and the high demand for illicit drugs in the U.S.  Ambassador Garza said, “I am actually quite optimistic.  Long term, I think Mexico’s economic prospects are strong.”

The article includes a map illustrating the drug cartels that control various geographic regions of Mexico; cartel control over most of the country’s territory is disputed.  90% of the cocaine that enters the U.S. comes from Mexico, the article said.

Although Mexico’s economy will likely return to growth when the U.S. emerges from recession, until the U.S. can dramatically reduce black market demand (which appears to be inelastic) for illicit drugs, social violence will probably (and sadly) remain a major obstacle for Mexico’s long-term economic development.

Javier Villareal Teran, Minister of Tourism for the state of Tamaulipas, announced that the state will seek to expand health care options for U.S. and Mexican tourists seeking low-cost, high quality health care, ranging from surgeries to routine medical treatment, according to an El Financiero report.

As health care costs in the U.S. continue their seemingly inexorable rise, Mexico is wll poised to offer lower cost alternatives to financially struggling U.S. consumers.

The Foreign Policy Association Blog issued a good piece on what to expect from Mexico’s new Interior Minister, Fernando Francisco Gomez Mont Urueta, who was appointed following the death of Juan Camilo Mourino after his government plane crashed in Mexico City. 

Gomez Mont is an attorney and member of the ruling National Action Party (PAN). 

The Interior Minister in Mexico has historically been regarded as the second most important politician in the country.