(Adds background, quotes)
MEXICO CITY Nov 25 Falling copper prices and
rocky market conditions have changed the value of Grupo
Mexico's (GMEXICOB.MX) bankrupt U.S. unit Asarco, making the
Mexican company's offer to completely pay off Asarco's
creditors not viable, a Grupo Mexico lawyer told Reuters on
Grupo Mexico was kicked off Asarco's board due to the
bankruptcy proceedings and is fighting to reclaim control of
the company in a U.S. court, but faces a rival bid from India's
Sterlite Industries STRL.BOSLT.N, a unit of Vedanta
Resources Plc (VED.L).
Asarco, which operates three copper mines in Arizona, filed
for bankruptcy protection when faced with millions of dollars
in asbestos lawsuits.
Sterlite originally offered $2.6 billion to buy Asarco but
withdrew from the deal in October because of falling metals
prices. Vedanta said this month it was still eyeing Asarco but
an agreement could only be reached at a substantially reduced
Grupo Mexico made a counter offer for Asarco, which totaled
some $2.7 billion, and promised to pay off all creditors.
"When we first made the offer (to pay creditors 100
percent), it was rejected. Now the company has a different
price, so obviously this offer is off the table, the world
changed," Jorge Lazalde, the lawyer in the Asarco case, said in
As copper prices plummet on worries of a global economic
slowdown, Asarco was now operating at a loss, Lazalde said.
Prices have slumped almost 60 percent from a record high in
July as demand drops and stocks have more than doubled in
London Metal Exchange warehouses.
"With the October net loss of $10.7 million, Asarco's
appeal to a potential acquirer has changed," HSBC said in a
recent research note.
Lazalde said Grupo Mexico was waiting to see if Asarco
reached a revised deal with Sterlite to present a new offer.
According to court documents, bankruptcy Judge Richard
Schmidt in Corpus Christi, Texas allowed mediation between
Sterlite, Grupo Mexico and Asarco to continue through Nov. 18,
but said further mediation would have to be court approved.
(Reporting by Mica Rosenberg in Mexico City and Emily Chasan
in New York; Editing by Marguerita Choy)