David Martínez (businessman)
David Martínez Guzmán is a Mexican investor who is the founder and managing partner of Fintech Advisory. This firm specializes in corporate and sovereign debt. Fintech Advisory has offices in London and New York City, and he currently divides his time between those two cities.
Described as "the most influential Mexican on Wall Street," Martínez played a major role in the restructuring of Argentina's sovereign debt and described himself in 2013 as having participated in nearly every restructuring of sovereign debt during the previous 25 years. His investments have been characterized as extending "from New York to Patagonia." He is a major holder of assets in Argentina, with Fintech Media LLC, a subsidiary of Fintech Advisory, owning "more than a billion dollars in financial assets" in Argentina alone.
Early life and education
David Martínez was born to Manuel Martínez and Julia Guzmán in Monterrey, Mexico. His family lived an average life until his father inherited a small fortune. Later, Martínez moved to Rome and enrolled in Legion of Christ Seminary to become a priest. After six months, he decided he was not suited for that vocation.The New York Times has noted that Martínez's hometown, Monterrey, "is home to some of Mexico's largest industrial companies", with power being "heavily concentrated among businessmen in the so-called Group of 10, a club that includes the Sada family." Although Martínez "was not a part of that circle, he had cultivated deep connections to it," helping the Sadas in 2004, for example, when one of their firms went bankrupt, and, later, becoming involved in the bankruptcy of the Sada-owned firm Vitro. According to one source, Martínez's "paternal great-great-grandmother was the sister of the paternal grandfather of Adrian Sada."
"As a young man," according to The New York Times, Martínez "was a member of Regnum Christi, an evangelical group related to the Legionaries of Christ, an influential Roman Catholic order in Mexico that includes among its benefactors the billionaire Carlos Slim." After earning a degree in electrical engineering from the Instituto Tecnológico y de Estudios Superiores de Monterrey, he "moved to Rome to study philosophy at the Pontifical Gregorian University and considered becoming a priest." He soon decided, however, that he did not have a clerical vocation, and instead obtained a loan from a friend's father in order to study at Harvard Business School. There he excelled as a student, made important connections, and earned an MBA.
Career
After receiving his MBA, Martínez worked for Citigroup, taking a position on the emerging markets desk in New York. At Citigroup, he began to work "with distressed debt in far-flung places." In 1985, he left Citigroup.Fintech
When he turned 30 in 1987, Martínez started Fintech, reportedly with the help of a US$300,000 loan from his grandmother, which he was able to repay with interest within a year.One of Martínez's most notable negotiations involved restructuring the debt of the Mexican chemicals and textile conglomerate Celulosa y Derivados, Sociedad Anónima, a company that had denied him a job when he was younger. CYDSA agreed to an exchange of debt for equity that would hand control of the company to creditors. Fintech bought US$400 million of CYDSA debt for US$40 million and thereby obtained 60% of the shares, taking control of the company from its founders, the Gonzalez Sada family.
Restructuring of Argentina's debt
Martínez has been heavily involved in the Argentinian economy for many years. In 1994, he "invested in the wrecked Argentinean economy by buying government bonds with a maturity of 37 years for $834 million.""Fintech was one of the major participants in the exchange of 2005," wrote William Dahill, a lawyer for Martínez. "He realized that the only way" that Argentina could recover from its economic crisis "would be through a reduction of its liabilities, which would allow the economy to grow and the country regain a minimum level of creditworthiness." Between 2004 and 2006, according to Daniel Marx, a former Finance Secretary of Argentina, Martínez paid $100 million on the secondary market for Argentine bonds with a nominal value of $700 million.
His "wholesale" purchase of defaulted Argentinian bonds was considered an act of "loyalty" to Argentina by Kirchner and others. During Argentina's worst economic times, he bought into "almost all" of the country's large firms, "from Telecom to Transener."
Ties to Kirchner family
Martínez has been described as being "closely linked" to the late Argentinian president Néstor Kirchner and as having been a "friend" of Kirchner's. According to one source, "whenever the former president traveled to the United States, he made a place in his schedule" for a meeting with Martínez. Describing Martínez as "Kirchner's Mexican friend," Italy's leading newspaper, Corriere della Sera, has noted that the rise in Martínez's economic fortunes "coincided with the exceptional political cavalcade of the Kirchners after the collapse of the South American country in December 2001."It is known that Guillermo Nielsen, then Secretary of Finance under Nestor Kirchner, met Martínez in Dubai in September 2003 to discuss the restructuring of Argentina's debt, and that the two men met six to 10 more times in New York, London, and elsewhere to continue the conversation. Over time, the "relationship between Martínez and the Kirchner government became stronger." In 2006, Martínez met Kirchner himself at the Argentine Consulate in New York. Five days later, "Martínez purchased 40 % shares of Cablevisión, the cable television system of Grupo Clarin, the largest media company in Argentina. Martínez can be seen sitting in the front row of the audience in a video of the 2007 inauguration of Cristina Fernández de Kirchner.
Cablevisión
Martínez bought Cablevisión "without any concern for antitrust legislation," and did so at a time when Néstor Kirchner "decided to put his electoral campaign in the hands of Grupo Clarin" and allowed the purchase by Martínez of 50% of Cablevisión. In 2005, Kirchner signed a decree extending broadcast licenses by 10 years; on December 7, 2007, three days before leaving office, he signed a decree permitting the merger of Clarin and Martínez's Cablevisión. After Martínez's purchase of Telecom Argentina, it was noted that his ownership of major stakes in both this firm and Cablevisión is illegal under Argentinian law. "Martínez could be forced to sell Cablevisión," reported Corriere della Sera. "But Christina Kirchner will decide." As of 2014, he held 40 percent of Cablevisión.Vitro
The New York Times reported on October 11, 2012, on Martínez's involvement in the bankruptcy of Vitro, a 103-year-old Mexican glassmaking firm run by the Sada family, an event that was surrounded by "Allegations of covert meetings, fraudulent debts and crooked courts" and that ended up with "the company in the hands of its shareholders, while costing bondholders as much as 60 percent of their investment."The Times traced the story to 2009, when Martínez loaned Vitro $75 million in exchange for the title to several of its properties and an option to return them to Vitro later in exchange for a 24 percent stake in the firm. In 2010, Martínez "went to the different banks that Vitro owed money to and bought the claims," thus becoming the firm's "biggest individual outside creditor, owning about $600 million worth of claims." Vitro "began taking big loans from its subsidiaries, in effect creating a fresh class of creditors outside of the hedge funds — a group under its control, with the rights to approve any bankruptcy plan. Subsidiaries went from owing the parent company about $1.2 billion to being owed $1.5 billion." With Martínez's help, Vitro "outvoted many other bondholders to approve a reorganization plan" that paid creditors about 40 to 60 percent of what they were owed and kept the Sada family in control.
In response, American investor Paul Singer's firm, Elliott Associates, and other hedge funds, which together owned about $700 million of Vitro's old debt, claimed that Martínez had helped Vitro "muscle investors out of hundreds of millions of dollars through financial sleight of hand," and accused Vitro of "audacity, brazen manipulation and greed." Singer and the hedge funds sued Vitro and Fintech in the U.S., where a Dallas court ruled in their favor in summer 2012. An appellate court trial began in October.
This legal battle, reported the Times, was "drawing back a curtain on Mr. Martínez's secretive world" and "could have implications for other companies in the world's fastest-growing economies." Arturo Porzecanski, economist in residence at American University's School of International Service, told the Times that the case "highlighted apparent loopholes in the bankruptcy law of Mexico, through which Vitro ran an 18-wheel truck."
The Financial Times published an article by Martínez on March 7, 2013, in which he argued that Judge Griesa's "interference" might "make future sovereign restructurings impossible, setting a dangerous precedent for the world's financial system." Succumbing to "the demands of holdout creditors," wrote Martínez, Griesa had ordered the Argentinian government to pay them $1.3 billion. Noting that the "all sovereign restructurings" had been successful "partly because nations have most of their assets protected by law," Martínez characterized "holdout creditors" as "free riders" whom most nations pay off to avoid harassment; however, "Argentina's leadership, which knows how to fight, opted to defend itself against the world's most litigious funds, which now want to collect in full. These funds are seeking to reap the benefits of Buenos Aires' improved payment capacity – a result of the losses accepted by the vast majority during the restructuring." Martínez called it a "scandal" that Griesa was forcing this majority "to share the interest payments they accepted on their restructured bonds with the minority that litigated," an arrangement which would doubly punish "those who contributed in favour of those who did not." Martínez concluded: "Not only is Mr Griesa's decision unfair – it will also lead to society paying a price in the form of more protracted debt restructurings with less certain outcomes."
On March 11, the Financial Times ran a reply by Robert Shapiro of American Task Force Argentina, calling Martínez's article "a disservice to the FT's readers" and saying that Argentina's actions "pose the real threat to global finance." Shapiro explained that since Argentina's 2001 debt default, "the regimes of Néstor Kirchner and Christina Kirchner Fernandez have rejected every tenet of global finance. They refused to negotiate with bondholders, took four years to issue a 'take-it-or-leave-it' offer of 27 cents on the dollar or barely half the international norm, repudiated the debt of 25 per cent of bondholders who rejected that low-ball offer, and ignored more than 100 directives from US courts to honour their obligations." Rejecting Martínez's claim that Griesa had ordered "those who accepted the last restructuring...to 'share' what is owed to them," Shapiro stated that Griesa had "simply upheld Argentina's own original contract...and noted that under US law the Argentine government cannot choose to pay some creditors and not others." Shapiro commented that "The real victims of the Kirchners' long campaign to ignore their nation's obligations are the Argentine people," and quoted the recent statement by the Argentinian daily La Nación that "The main impediment for ending the conflict with the holdouts is that the government is prioritising the media battle with the creditors over channelling its energy towards seeking a technical solution."