NYT called potential savior a ‘thief’
Carlos Slim Helú, whose fortune of approximately $60 billion makes him the second-wealthiest man in the world, was reported by the Wall Street Journal over the weekend to be negotiating a financing that would prevent the New York Times Co. from possibly defaulting on $400 million in debt due in May.
“The talks are ongoing and may yet fall apart but one of the options being discussed is a preferred-stock issue” that would be structured somewhat like a loan and carry no voting rights, according to the Journal. “It’s not clear how much Mr. Slim would be willing to invest but the people familiar with the matter said it would likely be several hundred million dollars.”
(UPDATE 1/19/09: The Times reports the financing will be a $250 million, six-year, senior, unsecured note bearing 14% interest with warrants that, if fully exercised, could give Slim control of up to 18% of the company. The notes do not include voting rights but the common shares acquired through the warrants would have voting rights.)
Slim bought a 6.4% stake of NYT in September but the value of his shares since then has dropped by more than half to about $60 million. Inasmuch as a default by NYT would further erode the value of his holdings, it is fair to assume Slim would be motivated to come to the aid of the company.
Slim finds himself in a position to do so as the result of the wealth he amassed by owning a near-monopoly over both wired and mobile telephone services throughout Mexico.
Slim’s success as a businessman was the topic of a bluntly worded column by Times editorial writer Eduardo Porter in August, 2007. Here’s some of what he had to say:
Mr. Slim is richer even than the robber barons of the gilded age…. It takes about nine of the captains of industry and finance of the 19th and early 20th Centuries — [John D.] Rockefeller, Cornelius Vanderbilt, John J. Astor, Andrew Carnegie, Alexander Stewart, Frederick Weyerhaeuser, Jay Gould and Marshall Field — to replicate the footprint that Mr. Slim has left on Mexico.Now, Slim appears poised to be the man who may come to the rescue of America’s newspaper of record.
But the momentous scale is not the most galling aspect of Mr. Slim’s riches. There’s the issue of theft.
Like many a robber baron — or Russian oligarch, or Enron executive — Mr. Slim calls to mind the words of Honoré de Balzac: “Behind every great fortune there is a crime.” Mr. Slim’s sin, if not technically criminal, is like that of Rockefeller, the sin of the monopolist.
In 1990, the government of President Carlos Salinas de Gortari sold his friend Mr. Slim the Mexican national phone company, Telmex, along with a de facto commitment to maintain its monopoly for years. Then it awarded Telmex the only nationwide cellphone license.
When competitors were eventually allowed in, Telmex kept them at bay with some rather creative gambits, like getting a judge to issue an arrest warrant for the top lawyer of a competitor. Today, it still has a 90% share of Mexico’s landline phone service and controls almost three-quarters of the cellphone market....
But Mexico has paid, dearly. In 2005, there were fewer than 20 fixed telephone lines for every 100 Mexicans, and less than half had cellphones. Just 9% of households had Internet access. Mexicans pay way above average for all these services....