Elektra plunge causes Salinas to lose $5.5 billion in one day

(Bloomberg) — Grupo Elektra shares plunged 71% on Monday as they resumed trading after a months-long hiatus, wiping $5.5 billion from billionaire Ricardo Salinas Pliego’s fortune and knocking him off the Fortune 500 list. .

Elektra shares closed at 274.27 pesos per share, compared with 944.95 pesos last traded in July. Mexico’s stock exchange said in a filing early Monday that regulators asked the company to allow trading in the stock even if it breached a circuit breaker in a pre-market auction that has left it unable to recover for days.

Trading resumed despite Elektra saying in a statement before the market open that a court ordered the company to continue blocking the trade, adding that anyone trading in the stock could be held liable.

Grupo Salinas spokesman Luciano Pascoe said in response to questions: “We are obliged to reiterate that the resumption of these transactions, in addition to irreparable losses, may involve shares improperly obtained.”

Salinas himself triggered a trading halt back in July, claiming he was the victim of potential fraud. His lawyers claimed that a creditor used the company’s stock to fund a $110 million loan and later discovered that much of the stock appeared to have been sold, sending the stock price down. The rest of the money was pocketed by creditors, who deny any wrongdoing, they said.

“It’s important to remember that any final consequences are the sole responsibility of the buyer and seller,” Pascoe said.

Elektra was removed from the country’s main stock index after a month of no trading. Now it’s facing selling pressure from exchange-traded funds managed by BlackRock and Vanguard Group, which are required to dump shares. Volume surged to its highest level in more than seven years on Monday.

Officials had been trying to lift the pause for days, but low bids immediately triggered market circuit breakers designed to limit volatility, halting the pause again. Salinas’ attorneys argued for a ban on trading in the stock, saying it would cause “irreparable harm to the company.”

Salinas’ nearly 75% stake in the company is now worth about $2.2 billion, down from $7.6 billion on Friday. His net worth is $5 billion, according to the Bloomberg Billionaires Index.

Salinas, 69, has long been Mexico’s third-richest man, behind Carlos Slim and Germán Larrea. Entering this week, he ranked 262nd globally on the Bloomberg Billionaires Index. As wealth plummets, Salinas no longer appears among the 500 richest people.

In addition to Salinas’ stake, ETFs and other index-tracking funds hold about 4 million of the 47.8 million shares in the free float, according to data compiled by Bloomberg.

While the recession is evaporating Salinas’ paper wealth — a key factor in his ability to get loans at Elektra’s value — it could make it easier to delist Salinas’ stock. Elektra said last week it would hold a meeting at the end of December to discuss taking the company private.

–With assistance from Carolina Wilson.

(Pricing updated throughout)

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