NRI billionaire Anil Agarwal-led Sterlite Industries faces a potential $2.6-billion lawsuit if it loses out in the race to acquire America's third-largest copper producer Asarco to the target firm's parent company Grupo Mexico.
"Asarco's independent board and Sterlite sought the approval of certain conditions under which Asarco would grant a release from the potential $2.6 billion lawsuit to be brought against Sterlite for having breached the original purchase agreement to buy Asarco's assets. However, Judge Schmidt (of bankruptcy court) ruled that such release will not take effect if it is the Grupo Mexico Reorganization Plan the one that is eventually confirmed and approved, in which case Asarco, under the control of Grupo Mexico, would be able to pursue the aforementioned suit against Sterlite," Grupo Mexico said.
The bankruptcy court of Texas in the US has given initial nod to Sterlite Industries' $1.7 billion bid to acquire Asarco, of which cash forms $1.1 billion. This has been rivalled by Grupo Mexico's all cash $1.3 billion offer.
Both the parties can hike the bid if the need be in their respective reorganisation plans for Asarco.
Calls and messages sent to Vedanta officials remained unanswered till the filing of the report.
Grupo Mexico, which claims to have the support of all the creditors for the target firm, which is faced with asbestos and other environmental claims, says that it would be coming out with a reorganisational plan for Asarco in next few days.
"In the next few days, Americas Mining Corporation (arm of Grupo Mexico which controls Asarco) will present a reorganisation plan to the Judge containing the certainty and security of economic resources to match the plan presented by Sterlite..."
"...Which, in principle, had been accepted by all creditors with the exception of asbestos committee," the metals and mining group said.
After creditors give their approval to one of the competing plans to acquire Asarco, the bankruptcy court has to take the final call and award the controlling rights of the firm.
Sterlite, the Indian subsidiary of London-listed Vedanta Resources, had been negotiating the Asarco deal since last year. It had initially offered $2.6 billion for buying the assets of the ailing company, which has been in bankruptcy for over four years now.
However, with devaluation of mining assets and falling copper prices amid the global economic downturn, Sterlite wanted to settle the deal at a lower price and revised down its bid to $2.1 billion last year and then later to the present offer of $1.7 billion.
