UPDATE 3-U.S. judge approves break-up fee for Asarco bidder
(Updates with Asarco statement)
HOUSTON, July 1 (Reuters) - A U.S. bankruptcy judge approved a break-up fee and other protections on Tuesday sought by India's top non-ferrous metal producer, Sterlite Industries Ltd (STRL.BO), in its $2.6 billion bid for bankrupt copper miner Asarco LLC, according to court documents.
Judge Richard Schmidt also said Asarco parent Grupo Mexico GMEXICO.MX could put forward its own bankruptcy reorganization plan for the subsidiary it lost board control over when Asarco filed for bankruptcy nearly three years ago.
Schmidt's ruling during a hearing in Corpus Christi, Texas, will allow Sterlite and Grupo Mexico to compete against one another to resolve the bankruptcy that began in 2005 when Asarco was sued for $1 billion over environmental cleanup and asbestos claims.
After the ruling, Grupo Mexico vowed to win back control of Asarco in the competition.
"Although we disagree with the court's ruling in granting bid protections to Sterlite Industries and we intend to appeal that decision, we are gratified that the court also recognized that we should have the right to file our own reorganization plan and we are confident that our plan will ultimately be confirmed by the bankruptcy court," Grupo Mexico said in a statement.
Sterlite, an affiliate of London-listed Vedanta Resources Plc (VED.L), has proposed a straight purchase of Asarco's assets for $2.6 billion.
Asarco LLC's lawyer praised the judge's ruling.
"Judge Schmidt's opinion was thorough and well reasoned," said Jack Kinzie. "His approval of the Sterlite break-up fee sustains a process which will maximize the value of the assets for all interested parties. We are pleased with this result."
Allowing Grupo Mexico to file a competing plan "will subject that plan to a market test and it will now rise or fall on its own merit," Kinzie said.
Sterlite was the winning bidder at an auction of the assets on May 30. It needed an agreement on the protections by Wednesday before it would go forward with negotiating a deal, which must be reached by the end of the year.
The break-up fee could be triggered by the acceptance of a rival bid by the Asarco board.
For its part, Grupo Mexico, instead of purchasing assets it already owns, has proposed providing as much as $4.14 billion to pay off environmental and asbestos claims against Asarco.
Grupo Mexico would initially put up $2.7 billion, use $1 billion that Asarco has on hand and then kick in an additional $440 million if needed. Asarco faces $5.3 billion in claims.
Critics of the Grupo Mexico proposal say it would lead to lengthy trials to determine how much Asarco has to pay to clean up copper mining and refining sites across the United States. (Reporting by Erwin Seba; Editing by Braden Reddall and Carol Bishopric)
