Sterlite Industries won't complete the $2.6-billion purchase of bankrupt copper producer Asarco without a price reduction of ''hundreds of millions of dollars,'' lawyers said.
Because of the credit crisis and a drop in metal prices, Sterlite told Asarco it must cut its price, Asarco's lead bankruptcy lawyer, Jack Kinzie, said on Tuesday.
Asarco, based in Tucson, Arizona, was trying to sell itself to the Mumbai-based copper miner as part of a plan to reorganise and exit bankruptcy court protection. The companies will attend a court-ordered mediation session on October 30 with Asarco's parent, Grupo Mexico SAB, which has proposed a competing, $2.7 billion reorganisation plan, Kinzie said.
''There will be ongoing discussions between now and the 30th of October,'' Kinzie said. ''We will talk to the creditor constituencies and we will develop a strategy.''
Grupo Mexico attorney Luc Despins said that Asarco told US Bankruptcy Court Judge Richard Schmidt about Sterlite's decision during a hearing yesterday in Texas.
He declined to comment further. Grupo Mexico spokesman Juan Rebolledo declined to comment.
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Sumanth Cidambi, associate director of investor relations for Sterlite, didn't immediately return a call seeking comment.
Creditors of Asarco, who claim to be owed as much as $7.9 billion, are voting on the two reorganisation plans. Last month, lawyers for Grupo Mexico said none of the creditors had agreed to vote for its reorganisation proposal. The company, acting through one of its other units, planned to try to persuade creditors to support it, lawyers said.
A November 17 hearing to decide between Grupo Mexico's reorganisation proposal and the Sterlite plan remains on the court's calendar, Kinzie said.
Grupo Mexico, which owns Asarco through its Americas Mining unit, lost control of the copper miner after placing it in bankruptcy in 2005. Grupo Mexico is the largest mining company in Mexico. Environmental and asbestos creditors support Asarco's plan because it contains a settlement that would pay them at least $2.1 billion.