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| Asarco hauls Sterlite to court |
| BS Reporter / Mumbai Mar 21, 2010, 00:01 IST |
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Claims breach of purchase, sale agreement.
Asarco has filed a lawsuit against one-time suitor Sterlite Industries for backing out of a $2.6-billion deal to take the US copper miner out of bankruptcy in 2008.
Asarco had filed for bankruptcy protection in 2005 as it faced workers’ strike and more than $1 billion of asbestos and environmental claims. Asarco exited the bankruptcy in December 2009 and is under the control of Mexican miner Grupo Mexico now.
| TIME LINE |
| 2005 Asarco filed for bankruptcy protection |
| May 2008 Sterlite made $2.6-billion bid for Asarco |
| Oct 2008 Sterlite reduced the offer price |
| 2009 Groupo Mexico entered the race with Sterlite |
| Dec 2009 Groupo Mexico won the battle and got control of Asarco |
| Feb 2010 Sterlite appealed in higher court |
| March 2010 Asarco sued Sterlite for breaching $2.6 billion bid |
In a March 17 lawsuit, the company said that Anil Agarwal-promoted Sterlite, which is India’s largest copper producer, had breached its purchase and sale agreement with the miner and forced it to spend more on attorney fees, marketing and other costs.
Sterlite had bid $2.6 billion for Asarco in May 2008 and was chosen by the Asarco management to sponsor the company's bankruptcy exit. But copper prices fell, and in October 2008, Sterlite withdrew that offer, saying it needed a substantial reduction in the price. That brought it into conflict with Grupo Mexico which was seeking to regain control of the subsidiary post-bankruptcy.
Both Grupo Mexico and Sterlite entered another round of bidding with lower offers. Grupo Mexico eventually paid about $2.5 billion to regain control of Asarco and repay its creditors in full.
Sterlite officials were not available for comments. Even though Asarco emerged from bankruptcy in December, its contentious sale is still being fought in US courts.
Sterlite in February appealed in a “higher court” in the US against the District Court order to hand over Asarco back to Grupo Mexico. The company had hoped to win a reversal of the ruling by the US District Court in Brownsville, but will have to now face the legal suit for backtracking from the promised deal.
While working on the deal with Asarco, Sterlite had said the acquisition was in line with its strategy of leveraging its existing skills to become a diversified global copper producer and creating long-term value for its shareholders.
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