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http://online.wsj.com/article/SB10001424052748704511304575075931616601088.html

FEBRUARY 20, 2010

Rakoff Slams J.P. Morgan Over Loan
Judge Says Deal Would Let Rival of Empresas Cablevisión Gain Access to Confidential Information

By MICHAEL CORKERY and NICHOLAS CASEY

A federal judge has rebuked J.P. Morgan Chase & Co. for taking part in an what he called an “end run, if not a down right sham” in the way it arranged a $225 million loan deal for Mexican telecom company Empresas Cablevisión SAB.
[LOAN] Cablevision Mexico

Cablevisión’s satellite dishes at its Mexico City headquarters.

In a ruling unveiled late last month in U.S. District Court in Manhattan, Judge Jed Rakoff said the New York bank structured the deal so it would have allowed a major competitor of Cablevisión to gain confidential information about the company, which is Mexico’s largest cable-television operator.

That competitor, Telmex Internacional SAB, is owned by Mexican billionaire Carlos Slim, who has been fighting off Cablevisión’s advances on the Telmex telephone monopoly. Cablevisión itself is a unit of Grupo Televisa SAB, Mexico’s largest media giant. The dispute amounts to one of the year’s first showdowns between two of the country’s most powerful companies.

The legal case highlights the breadth of Mr. Slim’s Mexican empire, which consists of scores of companies, including those in banking, railways, construction, mining, airlines and hotels. Recently, Mr. Slim has extended that influence into the U.S., including a $250 million investment in New York Times Co.

“J.P. Morgan has been our banker for more than 20 years,” said Alfonso de Angoitia, executive vice president of Grupo Televisa, the largest shareholder of Cablevisión, and the largest Spanish-language broadcaster. “We feel betrayed.”

A J.P. Morgan spokesman declined to comment on the case, citing the pending litigation. In court papers, J.P. Morgan said that it acted in good faith and that its actions wouldn’t threaten Cablevisión’s trade secrets. Cablevisión’s complaint centers on a $225 million loan that J.P. Morgan arranged in 2007 for the purchase of a fiber- optics company. Unable to syndicate the loan to a group of European financial institutions, J.P. Morgan began discussions with the Mr. Slim-controlled Banco Inbursa, to “assign” the loan’s obligations and much of its returns to Inbursa. Mr. Slim’s son is the bank’s chairman.

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