Sterlite not to raise Asarco bid further

Decides to wait for the court verdict after lender’s support.

The bidding war for Asarco, the US-based copper miner, may be over with Sterlite Industries contemplating not to increase its offer price further and deciding to wait for the bankruptcy court’s verdict in August. The Indian metal producer, which had signed an MoU to acquire Asarco in March, revised its offer on June 16 to $1.87 billion from $1.7 billion earlier.

This included increasing the value of promissory notes to be paid over nine years to $770 million from $600 million and retaining the upfront cash payment of $1.1 billion. In response to that, rival Grupo Mexico revised the offer to outbid Sterlite Industries on June 26, the fifth time in four months, to $1.46 billion cash, from the earlier announced $1.3 billion. It also increased the payout for asbestos claimants to $280 million from $250 million.

This had led to speculation of another revised offer from the Indian bidder. “Sterlite has been meeting creditors separately and is confident of their support,” said a banker following the deal. “So, it has decided not to increase the offer price further,” he said.

Both the deals are not comparable as Sterlite is bidding for the assets while Group Mexico is bidding for the company, including its entire liability. The buyer needs the approval of three-fourth creditors.

Grupo Mexico, the erstwhile owner of Asarco, has the support of asbestos creditors, but they comprise a very small portion of the total number of creditors to the bankrupt Asarco.

There has also been a third bidder in the race. New York-based private equity (PE) fund Harbinger Capital Partners had submitted its bid of $500 million in cash and consumption of certain liabilities in May.

The PE fund is a key Asarco bond holder but has not revised its offer. It is not expected to have much support from the creditors.

Sterlite Industries stock closed Rs 575.7 a share on Friday losing 3.32 per cent of its value on Bombay Stock Exchange. Sensex, the benchmark index of the exchange, was down by 1.8 per cent to 13,504 on the day.