Sterlite Industries, the flagship company of Vedanta Resources, has advanced a step closer to acquire bankrupt copper miner Asarco after the US judge asked the creditors to vote on competing plans.
Sterlite has the support of majority of creditors as Asarco’s estranged parent Grupo Mexico put the company in trouble, taking away its lucrative mines and incorporated with latter’s subsidiary, said sources.
Vedanta Chairman Anil Agarwal told Business Standard, “The Bankruptcy Court’s decision to take the creditors opinion is favourable for Sterlite. We have already secured the support of legislators, local officials and workers. Thus, the company is hopeful that the creditors also will support our proposal.”
Judge Richard S Schmidt of the US Bankruptcy Court at Corpus Christi in Texas, recently approved the acquisition plans filed by the companies and told the creditors of Asarco to select the right owner. After the voting, the judge will make a final ruling taking into account the creditors' opinion. “The union in Asarco, United Steelworkers, and the legislators have already communicated to the creditors for extending the support to Sterlite, keeping Grupo away from taking over the company. Union officials also threatened that they would leave their jobs if Grupo is reinstated at the helm,” the sources said.
When Asarco filed for bankruptcy in 2005, the court and a creditors committee assumed control of the company, which Grupo Mexico bought in 1999. Labour disputes led to a four-month strike and it ended after Asarco filed for bankruptcy protection. However, Asarco had posted a profit of about $1.9 billion last year, recovering from the hurts of bankruptcy.
On May 31, Sterlite emerged as the lead bidder with $2.6 billion for buying Asarco's operating assets. But Grupo, which has vowed to fight the Sterlite’s Asarco purchase, had proposed a $4.1 billion revival package. Under the proposal, the company would put up $2.7 billion, use $1 billion, which Asarco has on hand, and then put in a further $440 million, if needed. Effectively, Grupo’s offer for the assets is about $100 million higher than Sterlite’s offer, said the sources.