Wilmington/Mexico City: India’s biggest copper producer, Sterlite Industries (India) Ltd, can buy bankrupt US copper miner Asarco Llc. for $1.1 billion (Rs55,220 crore) in cash and a $600 million note, a US judge said.
Bankruptcy judge Richard Schmidt in Corpus Christi, Texas, approved Asarco’s request to sign a sale contract with Sterlite, a unit of London-listed Vedanta Resources Plc., that allows rivals to top the offer. The decision sets up competition between two plans to reorganize Asarco, a unit of Grupo Mexico SAB de CV.
The proposed Sterlite purchase “is fair and reasonable and provides a benefit to the debtors, their estates and to all creditors”, Schmidt wrote in his order on Wednesday.
Facing claims: A file photo of Asarco Inc.’s metal production plant in Colorado. Asarco produced 235,000 tonnes of refined copper in 2007. Matt Staver / Bloomberg
Grupo Mexico, which put Asarco into bankruptcy in 2005, has proposed a $1.3 billion plan that would allow it to regain control of the Tucson, Arizona-based copper miner. Mexico City-based Grupo Mexico lost control of Asarco to a court-approved board a few months after the bankruptcy case began.
The proposed sale to Sterlite won’t become final unless Schmidt approves the related reorganization plan supported by Asarco’s board and its main creditors. The decision came after Schmidt on 14 April declined to rule on the deal, saying he needed additional time. Sterlite previously said the deal must be approved by Schmidt by 15 April.
Sterlite withdrew an earlier bid of $2.6 billion last year, saying it was too high amid a drop in copper prices. Under the proposed sale, Asarco may accept a higher offer until Schmidt gives final approval at a hearing on the company’s reorganization plan.
Asarco faces $7.9 billion in claims. Government agencies seeking payment for environmental clean-up and individuals who say they were damaged by asbestos-based products from an Asarco unit together are seeking $5.2 billion.
Schmidt ordered Sterlite, Asarco and a unit of Grupo Mexico into mediation last year. Grupo Mexico said at the time it was willing to pay $2.7 billion to ensure that Asarco’s creditors would be paid in full.
Copper prices then plunged, dropping 54% last year in New York. Asarco’s mines hold about 5 million tonnes of reserves. The 110-year-old company produced 235,000 tonnes of refined copper in 2007.
Dawn McCarty in Wilmington, Edvard Pettersson in Los Angeles and Thom Weidlich in New York contributed to this story.