Judge: Ruling on Sterlite Asarco bid before July 2

CORPUS CHRISTI, Texas (Reuters) -A federal bankruptcy judge said on Friday he would issue a ruling before July 2 that could clear the way for Sterlite Industries Ltd (STRL.BO) (SLT.N) to pursue a $2.6 billion bid for the working assets of bankrupt copper miner Asarco LLC.

Judge Richard Schmidt also extended the period of exclusive control by Asarco's board over the debtor company until he issues his ruling.

The bid by Sterlite, an affiliate of London-listed Vedanta Resources Plc (VED.L), will die if not approved by the court by July 2.

Asarco's board favors Sterlite's plan and urged Schmidt in hearings on Thursday and Friday to approve a $52 million breakup fee Sterlite wants as protection to pursue the bid through the end of the year.

"The plan we have now is the best plan," Asarco attorney Jack Kinzie said. "It's the plan that got the parent to come forward with its offer. It's a cash payment."

Asarco's push is in the face of a revised, detailed offer from corporate parent Grupo Mexico (GMEXICOB.MX), which was formally delivered on Friday. Grupo Mexico has vowed to do everything it can to win control of Asarco, which owns three copper mines in Arizona.

Asarco's board was working to arrange a meeting so it could review Grupo Mexico's proposal in detail, Schmidt was told in testimony on Friday.

The two proposals take different routes to bring Asarco out of bankruptcy protection, which it sought in 2005 when faced with a $1 billion lawsuit for environmental cleanup and asbestos claims.

Sterlite was the winning bidder at a May 30 auction with its $2.6 billion offer.

Grupo Mexico, one of the losers in the bidding, put detailed numbers to its repeated proposals to pay in full on all claims against the company.

Grupo Mexico, which lost board control of Asarco in the bankruptcy filing, would put up $2.7 billion to pay off claims and use $1 billion Asarco has on hand. The company would also kick in another $440 million if needed.

If Sterlite buys the assets, Asarco would use the $2.6 billion to pay claims along with the $1 billion the company has on hand.

Under Grupo Mexico's plan, any further claims would be up to the reorganized Asarco to pay off, either from an expected $1 billion in annual earnings or by selling the company's assets.

Asarco faces up to $5.3 billion in claims for asbestos and to clean up copper mining and smelting sites across the United States.

Grupo Mexico emphasized its desire to control the claims process.

"We have to have control of the claims process," said Luc Despins, attorney for Asarco's parent. "We have to have control because we're buying it."

But opponents of Grupo Mexico said on Friday the corporate parent really would allow decades of lawsuits in state courts to determine how much it should pay.

(Reporting by Erwin Seba, editing by Mark Porter)