Agreement might delay Circuit City investor

Even though he might want to, a Mexican billionaire will not be allowed to serve as an officer of Circuit City Stores Inc. or sit on its board of directors for nearly three years. The reason is a 2005 run-in with the Security and Exchange Commission.

Ricardo Salinas Pliego last week became the largest single stakeholder of the Henrico County-based consumer

electronics retailer. In a filing with the SEC yesterday, he noted that he “acquired the shares with a view towards possibly seeking influence over the management, business and operations of [Circuit City].“

A spokesman for Circuit City said yesterday that he could not comment.

Salinas was charged in 2005 with misleading investors and the board of directors of TV Azteca S.A. de C.V., a Mexican television network he was chairman of, according to papers filed by the SEC Jan. 4, 2005, in U.S. District Court for the District of Columbia.

The case was settled in September 2006. Salinas did not admit wrongdoing, but agreed to pay a $7.5 million fine and not to sit as an officer or director for any U.S. publicly traded company for five years.

An SEC spokesman said yesterday that the man who owns a chain of 880 consumer electronics stores in Latin America is not allowed to appoint anyone to a U.S. company board, either.

As far as Salinas was concerned the matter was settled, a spokesman for Salinas said yesterday.

According to court papers, Salinas, two other men and two corporations manipulated a debt settlement between Unefon S.A. de C.V. and Nortel Networks Corp. Unefon was a unit of TV Azteca, where Salinas was chairman.

The papers say Salinas created a separate company that bought $325 million worth of Unefon debt against Nortel for $107 million.

After three months, Unefon paid the full value of the debt to Salinas’ company. The transaction netted Salinas a “windfall profit of $109 million,“ according to the SEC. The SEC also accused the defendants of covering up Salinas’ involvement in the transactions to prevent “the public outcry that would have ensued had investors learned of his misconduct.“

Yesterday’s filing said Salinas bought 30.3 million shares of Circuit City stock last week. He paid $41.4 million for his nearly 47.2 million shares of Circuit City, for a 28.1 percent stake.

Contact Louis Llovio at (804) 649-6348 or .