The U.S. Department of the Treasury’s Commitee on Foreign Investment in the United States (known as “CFIUS”) issued final regulations governing national security reviews of foreign investments in U.S. companies on November 14, 2008. 

Only “covered transactions”, generally meaning transactions by or with any foreign investor that could result in control of a U.S. business by a foreign investor, are subject to CFIUS review.

Among the foreign investment transactions that are typically not ”covered transactions” are:

• Investments by a foreign investor in a start-up companies;
• Asset acquisitions if the assets acquired by a foreign investor are not a “U.S. business”; and
• Lending transactions unless a foreign investor acquires financial or governance rights characteristic of an equity investment.

Mexican and other foreign investors should consult with an attorney before making an investment in a U.S. company to determine whether the investment is a “covered transaction” subject to CFIUS review.  Civil penalties of US$250,000 per violation can be levied against investors who violate the regulations.

Cascade Investment, LLC, the investment vehicle owned by Bill Gates, and The Bill & Melinda Gates Foundation Trust, have increased their ownership stakes in Monterrey-based Mexican beverage companies, Coca-Cola FEMSA, S.A.B. de C.V. (NYSE: KOF) and Fomento Economico Mexicano, S.A.B. de C.V. (NYSE: FMX), by acquisition of additional American Depository Shares (ADSs). 

According to a Schedule 13D filed with the SEC on August 1, 2008, Cascade Investment and The Bill & Melinda Gates Foundation respectively owned 857,128 ADSs and 4,561,072 ADSs of FEMSA as of August 1, 2008, representing 3.16% and 16.84% of the company’s Series L Shares. 

And according to a Schedule 13G filed with the SEC on September 5 2008, Cascade Investment and The Bill & Melinda Gates Foundation respectively owned 20,966,975 ADSs and 747,600 ADSs of Fomento Economico Mexicano as of September 5, 2008.

Cascade also owns 19.7 million shares of Mexican broadcaster Grupo Televisa (NYSE: TV), according to Reuters.

As discussed in November 12, 2008 Mexico Law Blog post, JP Morgan Chase and several other banks have filed lawsuits against Mexican supermarket operator Controladora Comercial Mexicana (CCM) (MXK: COMERCIUBC) alleging breach by CCM of its exchange-rate derivative contracts.  

We have not yet had the opportunity to review the court filings, but based on our own research, as of November 14, 2008, the claims against CCM in New York state courts appear to consist of the following:

• JP Morgan Chase Bank N.A. v. Controladora Comercial Mexicana, filed on November 6, 2008, New York County, Case Number 603215/2008.
• Barclays Bank PLC v. Controladora Comercial Mexicana, filed on November 6, 2008, New York County, Case Number 603233/2008.
• J Aron & Co v. Controladora Comercial Mexicana, filed on November 6, 2008, New York County, Case Number 603225/2008.
• Merrill Lynch Capital Svcs Inc. v.  Controladora Comercial Mexicana, filed on November 6, 2008, New York County, Case Number 603214/2008.

Mexican entrepreneur Ricardo Salinas Pliego, who recently purchased a 28.5% stake in struggling electronics retailer Circuit City, may increase his stake to become the company’s largest shareholder and is considering the purchase of the company to take it out of bankruptcy, according to a Sentido Comun report.  Salinas Pliego is the majority owner of Mexican appliance retailer Grupo Elecktra, which also owns Mexican bank Banco Azteca.  

Both Grupo Elektra and Banco Azteca are affiliated with Grupo Salinas, which has no equity holdings but operates as a management entity and decision forum for the executives of Grupo Salinas member companies, which also include TV Azteca, Azteca America, Seguros Azteca, Afore Azteca, Iusacell, Unefon, Movil@ccess, and Azteca Internet.

Mexico Law Blog’s newsletter will now be issued once per week, not every four posts as previously issued.  It is hoped that the new issuance schedule will reduce email congestion for subscribers.

U.S. franchise operator CKE has announced that licensee Ricardo Cardenas has opened the franchise’s 100th Carl’s Jr. restaurant in Mexico, according to a Business Wire press release.

Electronic payment facilitator PayPal, a subsidiary of eBay, has launched its website in Mexico, according to a Sentido Comun report.  The website enables consumers and businesses to make secure payments in Mexican currency with credit cards or through bank accounts (via ACH), as well as deposit and transfer funds.  PayPal’s Mexican website is www.paypal.com.mx.

Monterrey-based Farmacias Benavides (MXK: BEVIDESB), one of the largest drug store chains in Mexico, announced that its shareholders have approved the payment of a dividend of approximately US$0.10 cents per share. 

The dividend payment, which represents a total disbursement of MX$40.8 million pesos (approximately US$3.1 million), will be made on December 8, 2008.

The offices of Culiacan, Sinaloa newspaper El Debate were the subject of a midnight gun and grenade attack on Sunday, November 16, 2008, according to a report by Jeremy Schwartz’s Uncovering Mexico blog.  No was injured in the attack, which is believed to have been a reprisal by a drug cartel against the newspaper. 

The report also reflected upon a wave of recent assasinations of individuals involved in the free press, all of which are also believed to have been perpetrated by the cartels. 

• Last week, Armando Rodriguez, a crime reporter for El Diario in Ciudad Juarez was shot and killed in front of his home as he waited to take his daughter to school. 
• In September, radio host Alejandro Fonseca was killed in the southern state of Tabasco as he hung political banners denouncing a wave of kidnappings in his state. 
• In April, two radio reporters were killed in Oaxaca.

Nobel Prize winning Mexican scientist and leading climate change expert Mario Molina will lead the science and technology group of President-Elect Barack Obama’s transition team, according to a report at Jeremy Schawart’s Uncovering Mexico blog.  Mr. Molina teaches chemistry at the University of California-San Diego.

Molina, who is frequently quoted in the Mexican press, has been a tireless advocate of for alternative energy sources in Mexico and a champion of reversing Mexico City’s pollution problems, the report said.