Corpus Christi, Texas: Sterlite Industries (India) Ltd’s latest offer to buy bankrupt copper producer Asarco Llc should be ignored by the court that will make a final decision on the sale, a bankruptcy judge said.
Instead, Grupo Mexico SAB should be allowed to regain control of Asarco, four years after putting it into bankruptcy, US bankruptcy judge Richard Schmidt in Corpus Christi, Texas, said in a recommendation to the higher court.
Schmidt rejected Sterlite’s request that its bid, made after he made his 31 August decision, should be considered by the federal judge who will decide which company gets Asarco.
Letting Sterlite revise its bid would be fundamentally unfair, Schmidt said.
Grupo Mexico and Sterlite each have promised to spend at least $2.5 billion (Rs12,000 crore) to guarantee that Asarco’s creditors are repaid in full.
The final decision about which company gets Asarco will be made by US district judge Andrew Hanen in Brownsville, Texas.
Grupo Mexico lost control of Tucson, Arizona-based Asarco after putting it under court protection in 2005. Last year, Hanen ruled that Grupo Mexico-intentionally harmed Asarco before putting it into bankruptcy by stripping the company’s stake in Southern Copper Corp.
Hanen ordered Grupo Mexico’s main US holding company to return the Southern Copper stake and all related dividends, a judgement potentially worth at least $8 billion. Grupo Mexico has appealed that ruling.
Who gets the money from that judgement should Grupo Mexico’s appeal fail has been one of the key questions in the bankruptcy case.
Schmidt also said his recommendation in favour of Grupo Mexico would remain unchanged, even if Hanen agrees to consider Sterlite’s revised bid.
Grupo Mexico’s plan remains the superior plan, Schmidt said in his recommendation.
In its new proposal, Sterlite said it had increased the amount of cash that creditors would recover and agreed to cap the total it would try to collect from Grupo Mexico from the Southern Copper judgement.
The case is In re Asarco Llc, 05-21207, US bankruptcy court, southern district of Texas (Corpus Christi).