Friday, London-based mining conglomerate Vedanta Resources Plc (VED.L) said its subsidiary, Sterlite Industries India Ltd. (SLT) has raised its offer to buy substantially all of the operating assets of copper mining company Asarco LLC to $2.565 billion cash on closing from $2.135 billion offered earlier.
The company pointed out that the revision, after extensive discussions and review, would provide full cash payment to asbestos creditors and to allowed late filed claims and allowed subordinated claims. The revision would also provide for surplus cash after closing for the smooth continued operations of Asarco. With this change, Mumbai, India-based non-ferrous metals and mining company Sterlite will own 100% of the creditors' interest in SCC litigation trust, the company noted.
Vedanta noted that modification to the plan has been accordingly submitted to the District Court for its consideration.
Tucson-based Asarco, with operations in United States and Peru, has a smelter, three mines, associated mills and solvent extraction-electrowinning plants in Arizona, and a refinery complex in Texas. Asarco, formerly known as American Smelting and Refining Co., is a 110-year-old company, and has about 2,500 employees. For the year 2008, the company had reported total revenues of nearly US$1.9 billion and profit before tax of US$393 million for the year 2008. Asarco sold about 237,000 tonnes of refined copper in 2008. Its mines have estimated reserves of 5 million tonnes of contained copper.
Asarco filed for chapter 11 bankruptcy protection on August 9, 2005, due to asbestos claims. Its main creditors include government agencies seeking environmental claims and asbestos claims from individuals. Mexican miner Grupo Mexico SAB de CV, which acquired Asarco in a leveraged buyout in 1999, lost control of the copper miner when a judge appointed an independent board, after the company was placed in bankruptcy. At one point of time, Grupo Mexico was ready to pay the creditors to win back the company, but lost interest later with the fluctuation in copper prices.
Last year, Vedanta had made a $2.6 billion cash offer for the miner through Sterlite, but withdrew it later citing the price was too high amid weaker copper prices and tighter credit markets. But, in March this year, Sterlite signed a new agreement with Asarco to buy the operating assets for $1.7 billion. The consideration comprised a cash payment of US$1.1 billion on closing and a senior secured non-interest bearing promissory note for US$600 million, payable over a period of nine years.
Meanwhile, in early June, Americas Mining Corp., or AMC, an affiliate of Grupo Mexico, announced submitting an amended and improved reorganization plan to secure control of Asarco, in connection with Asarco's Chapter 11 proceedings. According to the revised plan, AMC said it would invest $1.55 billion in Asarco, adding up to about $2.9 billion in cash plus other considerations, including the cash Asarco currently holds. The new plan would pay Asarco creditors up to 95% of their claims. AMC then said that if its plan is approved it would pay $2.703 billion on the date the plan is confirmed, and the remaining $250 million a year later.
In August, Sterlite raised its offer for the operating assets of Asarco by about $500 million, resulting in a revised total consideration of about $2.1 billion. Sterlite also had proposed to support a plan of reorganization, by which it will pay creditors in full their allowed amount of claims and full post petition interest.
On September 1, Judge Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, issued a formal recommendation to confirm the reorganization plan sponsored by AMC. The judge's recommendation proposes that the federal district court approve the parent companies' plan rather than the one filed by the debtor, Asarco LLC and its sponsor, Sterlite (USA), Inc. As per earlier announcement, any deal is subject to the approval of the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division.
In his 27-page recommendation, Schmidt reportedly wrote that the parent plan, which is for Grupo Mexico to take control of the company as it emerges from bankruptcy, pays $2.4799 billion for the assets of the debtor, while the debtor's plan pays $2.1675 billion.
Although the recommendation is not binding, it is expected to weigh on the final decision. Judge Andrew Hanen of the U.S. Federal District Court in Brownsville, Texas has the responsibility of confirming any plan of reorganization.
Commenting on the judge's recommendation, Joseph Lapinsky, President and Chief Executive Officer of Asarco LLC, then said, "Our Board will consider the court's recommendations and findings and then, in consultation with our advisors, major creditor constituencies, and Sterlite, will determine the next steps that are in the best interest of the debtors and their estates."
It is reported that the asbestos claimants had been backing a bankruptcy reorganization plan submitted by Asarco's estranged parent, Grupo Mexico, while Asarco's current management team, which was appointed by the bankruptcy court, and its unionized work force prefer that Vedanta be declared the winner.
On July 10, 2008, Sterlite had reached a deal with unions representing the workers of Asarco on the terms of the collective bargaining agreement that would go into effect once the proposed acquisition is approved by the bankruptcy court overseeing Asarco's Chapter 11 case. The bargaining agreement ensures that Asarco's operations would be improved and made more competitive. The parties have also agreed that the term of the current agreement expiring in 2010 will be extended by three years to 2013.
The struggle to determine control of Asarco as it emerges from its bankruptcy filing has involved legal and financial tactics with offers and counteroffers rising and falling with global copper prices. The Wall Street Journal had previously reported that a third party, bondholder Harbinger Capital Partners, also has decided to make a play for Asarco's assets.
Sterlite previously had noted that in the deal it would assume operating liabilities, but not legacy liabilities for asbestos and environmental claims for ceased operations. The successful completion of the deal would expand Vedanta's presence in the U.S. while boosting its move towards being a fully integrated producer of non-ferrous metals.
Anil Agarwal, Chairman of Sterlite, earlier said, "This acquisition is in line with our strategy of leveraging our existing skills to become a diversified global copper producer and creating long term value for shareholders."
In June, Vedanta' subsidiary Sesa Goa Ltd. acquired Dempo Group's V S Dempo & Co. Private Ltd., which in turn, also holds 100% equity shares of Dempo Mining Corp. Private Limited and 50% equity shares of Goa Maritime Private Limited, for a total consideration of Rs. 1,750 crores, or US$368 million, on a debt-free and cash-free basis.
Earlier, in March, Vedanta had said it plans to acquire about 14.9 million shares of Madras Aluminium Co. Ltd or MALCO for the discovered price of Indian Rupees 115 per equity share, representing a total cash payment of INR 1,713 million or US$34 million. Vedanta's shareholding in MALCO will increase to 93.2%.
VED.L is currently trading at 1,926.00 pence on the London Stock Exchange, up 36.00 pence or 1.90%, on a volume of 647 thousand shares. SLT closed its trading on Thursday at $15.70, up $0.29, on a volume of 1.9 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.