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| Grupo Mexico offers $2.9 billion to regain control of Asarco |
| Press Trust Of India / New York Jun 04, 2009, 00:46 IST |
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Grupo Mexico SAB, the parent of American copper producer Asarco, has offered $2.9 billion to regain control of the bankrupt entity, says a media report.
Grupo Mexico “is offering $2.9 billion in a new reorganisation plan to take its US copper unit, Asarco LLC, out of Chapter 11 bankruptcy, where it has languished since August 2005,” The Wall Street Journal said in a report published online today.
Indian copper producer Sterlite Industries, which is part of the Vedanta Group, is looking to acquire Asarco for about $1.7 billion.
“Tuesday’s bid comes a week after Grupo Mexico’s announcement that it had placed $1.3 billion in an escrow account to demonstrate the seriousness of its intentions to regain control of its subsidiary despite the challenge from Vedanta,” the daily said. Attributing to Grupo Mexico, the report said the balance of $2.9 billion it would pay to Asarco’s creditors would come from a $250 million settlement with Asbestos claimants, who are classified as creditors in the bankruptcy case, in addition to cash available with Asarco.
Vedanta spokesperson could not be reached for comments.
Last month, Grupo Mexico came out with an offer of $1.6 billion, including a cash component of $1.3 billion, rivaling Sterlite's bid of $1.7 billion.
Sterlite, the Indian subsidiary of London-listed Vedanta Resources, has been negotiating the Asarco deal since last year. It had initially offered $2.6 billion for buying the assets of the ailing company, which has been bankrupt for over four years now. However, with devaluation of mining assets and falling copper prices amid the global economic downturn, Sterlite wanted to settle the deal at a lower price and revised down its bid to $2.1 billion last year and then later to the present offer of $1.7 billion.
Sterlite is looking to acquire Asarco’s three open-pit copper mines and associated mills and SX-EW in Arizona; a copper smelter in Arizona; a copper refinery, rod and cake plants, and a precious metals plant in Texas, the US.
Asarco, formerly known as American Smelting and Refining Company, is a 110-year-old firm and had filed for bankruptcy protection in 2005 after being sued for $1 billion over environmental issues.
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