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| Sterlite gets crucial nods; verdict today |
| Nevin John / Mumbai Aug 31, 2009, 00:14 IST |
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In the protracted bidding war for bankrupt copper miner Asarco, Sterlite Industries has moved a step ahead of rival Grupo Mexico by securing the support of the US company’s creditors, its workers union, the Arizona Attorney General and state legislators.
The bankruptcy court at Corpus Christi in Texas is expected to pronounce its verdict on the fate of the Tucson-based company tomorrow as the hearing ended last week. Whichever company US Bankruptcy Judge Richard Schmidt picks tomorrow will wind up owning Asarco.
Asarco, which owns three copper mines in Arizona, is a 110-year-old company. It filed for bankruptcy protection in 2005 after being sued for $1.6 billion over environmental issues.
“A few days back, the Arizona Attorney General’s representative informed the court that he would prefer Sterlite over Asarco’s estranged parent, Grupo,” said sources.
A banker said Asarco’s unsecured creditors had recently voted in favour of Sterlite, the Indian copper miner. “They don’t wish Grupo gaining control of the company again. The Mexican metal producer had secretly transferred valuable assets of Asarco into its fold and exited the company when environmental liabilities piled up,” he said.
Recently, the third bidder in the fray, Harbinger Capital Partners, while dropping out of the race, supported Sterlite, part of Anil Agarwal’s Vedanta group. According to court documents, Harbinger and its partner, Citigroup Global Markets together comprise Asarco’s largest bondholders.
A week back, Sterlite had once again increased its offer for the assets of Asarco by $500 million to $2.1 billion, citing an increase in copper prices. The revised offer was to match Grupo’s cash component of $2.2 billion. Later, Grupo offered to extend the collective bargaining agreement of workers at Asarco for two years.
Protesting against Grupo’s takeover plan, members of United Steelworkers, a major trade union in the US, recently picketed Asarco’s mines and other facilities in Southern Arizona. “When Asarco was controlled by Grupo from 1999 to 2005, the company unilaterally cut healthcare benefits for hundreds of retirees and disability benefits for other employees,” said sources.
Earlier this year, a federal judge in Brownsville ruled that Grupo defrauded Asarco's creditors when it transferred Asarco's stake in Southern Copper Corp, then known as Southern Peru Copper, to a subsidiary before Asarco's bankruptcy case. The judge ordered Grupo to return Asarco 30 per cent of Southern Copper's shares and dividends, an award valued by the committee at $6.6 billion. Grupo is appealing against the judgment.
Originally, Sterlite was to acquire Asarco for $2.6 billion, but withdrew the offer during the downturn, citing a decline in copper prices. Grupo, which is controlled by Mexico's third-richest man, German Larrea, had withdrawn from the takeover bid just before Sterlite reduced the offer price.
Sterlite has proposed to double Asarco’s capacity, and maintain quality and environmental standards. Asarco reported production of 235,000 tonnes of copper in 2007, which fetched it a profit of $350 million.
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