Nov. 18 (Bloomberg) -- Mexican billionaire Ricardo Salinas Pliego raised his stake in Circuit City Stores Inc. to 28 percent to become the biggest shareholder as the U.S. consumer electronics retailer works to emerge from bankruptcy protection.

Salinas reported owning a 10 percent stake on Nov. 12 after accumulating 16.8 million shares. He has purchased an additional 30.4 million shares at 22 cents to 26 cents apiece since then, according to filings with the U.S. Securities and Exchange Commission. Salinas bought less than 5 percent of his 47.2 million-share stake before Circuit City declared Chapter 11 bankruptcy on Nov. 10, said Luis Nino, a spokesman for Salinas.

The share purchase is a ``strategic'' move that would expand Salinas's retail operations into the U.S. for the first time, said Nino, who called the transaction an acquisition.

``This is an investment that's right in line with his experience and knowledge,'' Nino, who runs Salinas's banking unit, said in an interview. ``It's a very carefully planned investment.''

Circuit City obtained court approval last week to borrow as much as $1.1 billion to finance operations on an interim basis while it restructures. The Richmond, Virginia-based company said it will save $40 million a year by the bankruptcy court voiding lease agreements on 155 stores while it develops a plan to emerge from bankruptcy.

Grupo Elektra

Through his holding company Grupo Salinas, Salinas owns Grupo Elektra SAB, Mexico's biggest electronics retailer, and the country's second-largest broadcaster, TV Azteca SAB. He also owns Grupo Iusacell SA, Mexico's third-largest mobile-phone company. Salinas bought control of the Iusacell from Verizon Communications Inc. and Vodafone Group Plc for $7.5 million in 2003 after the company defaulted on bonds.

Nino declined to say if Salinas plans to increase his stake further. Salinas will make a filing with the SEC by tomorrow that states the purpose of the share purchases, he said.

Salinas recognizes the risk of taking an equity stake in Circuit City, which includes the possibility of it being wiped out during the restructuring, Nino said.

``These are very tough times for the market,'' Nino said. ``You can look at it two ways: You can think it's the end of the world or you can think it's the beginning of the world.''

Circuit City spokesman Bill Cimino declined to comment.

2006 Lawsuit

Salinas, the fourth-richest Mexican with a net worth of $6.3 billion according to Forbes magazine, settled a lawsuit in 2006 with the SEC under the Sarbanes-Oxley Act in which the U.S. regulator had accused Salinas and his associates of making $218 million of improper profits at the expense of minority shareholders. Salinas and Pedro Padilla, a board member of TV Azteca, agreed to pay a combined $8.5 million.

That settlement won't affect Salinas's investment in Circuit City, Nino said.

``He's going to be careful, first of all, in meeting all the legal requirements,'' Nino said.

Circuit City fell 1.5 cents, or 7 percent, to 20 cents a share at 4 p.m. in New York trading.

To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net or Thomas Black in Monterrey, Mexico, at tblack@bloomberg.net.

Last Updated: November 18, 2008 17:01 EST