Thursday, August 28, 2008

Stakes raised in battle for Asarco

Grupo Mexico's Phoenix-based subsidiary, Americas Mining Corp., put $2.7 billion in cash plus a $440 million guaranteed bond on the table today in a bold proposal to win the court battle over who controls Tucson-based Asarco. Grupo Mexico expects to use another $1 billion of Asarco's cash to offer "full payment of all of allowed creditor claims."

The way I understand it, the difference in the two reorganization plans in front of the bankruptcy court is that Asarco LLC proposes to settle claims of billions of dollars in environmental and asbestos liabilities, while Grupo Mexico would continue to litigate them. Under today's proposal, Grupo would pay them in full, once the courts determine what is owed.

Grupo argues its plan is better for Asarco creditors "since it remains the only proposal offering creditors full value for their allowed claims." The key word there seems to be "allowed" - the amount allowed by the courts, rather than amounts negotiated between creditors and Asarco in the competing proposal.

The judge is expected to make a decision as early as next month.

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