(Bloomberg) -- Shares of Grupo Elektra plunged to their lowest since 2007 on Tuesday before rebounding, capping off two days of trading that wiped out more than $5 billion from the fortune of controlling shareholder Ricardo Salinas Pliego.
The stock closed 4.8% higher at 287.52 pesos in Mexico City Tuesday, turning positive late in the day after it fell as much as 32%. Elektra was trading at 944.95 pesos in July when Salinas triggered a trading halt, alleging he was a victim of potential fraud. It plummeted 71% on Monday.
Even after Tuesday’s gains, the company has lost some $7.2 billion in market value this week, according to data compiled by Bloomberg.
Elektra said in a statement that the country’s securities regulator had ignored a court order blocking trading from resuming, ignoring its responsibility to protect investors after a “criminal fund” that had illegally appropriated 7 million shares and sought to sell them in the market.
The market slump “does not reflect the real value of Grupo Elektra’s assets,” the company said. “The company has shown a solid performance of the financial and commercial businesses, and it continues to operate in a normal way.”
Salinas’ lawyers have claimed a creditor used the company’s shares to fund a $110 million loan, and later discovered most of the shares appeared to have been sold, pushing the stock price down. The rest, they say, was pocketed by the creditor, who has denied any wrongdoing.
After a month of no trading, Elektra was kicked out of the country’s benchmark index. That’s now putting pressure on the shares as exchange-traded funds managed by BlackRock Inc and The Vanguard Group have to sell.
Elektra had tried to stop trading from resuming, saying it could cause “irreparable damage.” On Monday, the company reiterated the claims, adding that anyone dealing in the stock could be held responsible and that there was a “high risk of transactions being carried out with shares introduced in the market in an improper manner.”
Elektra said last week it would hold a meeting in late December to discuss taking the company private. Luciano Pascoe, a spokesman for Grupo Salinas, wrote on X on Tuesday that it was natural for the stock to fall given the company planned to delist its shares amid the fraud investigation.
“Is this what Elektra is worth? No, it is worth much more and its financial statements prove it,” Pascoe wrote, pointing to a 13% increase in revenues to a record high in the third quarter.
Monday’s plunge pushed Salinas out of the world’s top 500 wealthiest list. His stake of about 75% in the Elektra is now worth some $2.3 billion, down from $7.6 billion on Friday. That gives him a net worth of $5.2 billion, according to the Bloomberg Billionaires Index.
“You guys are real idiots,” Salinas wrote on X Monday in response to posts about the drop in his wealth. “This year broke a record in earnings. How do you like that? You all don’t understand that we decided to exit the stock market and nothing more. In a year, let’s see how we have done.”
Taxes
Adding to concerns, Mexican President Claudia Sheinbaum on Tuesday called on courts to resolve a series of a cases over government claims that Grupo Elektra owes billions in taxes.
Mexico claims four companies controlled by Salinas owe some 63 billion pesos ($3.1 billion) in taxes and the country’s Supreme Court is set to review final challenges in several of those claims. Salinas has said the government is unfairly trying to tax his companies twice.
--With assistance from Daniel Cancel.
(Updates with share price starting in first paragraph.)
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