Asarco gets two-month exclusivity extension; examiner appointment motion taken under advisement

By Rebecca Melvin

New York, Feb. 12 - Asarco LLC obtained court approval to extend its exclusive periods to file a plan of reorganization and to solicit votes to the plan, according to a filing with the U.S. Bankruptcy Court for the Southern District of Texas.

The order extends the company's exclusive plan-filing period to April 11 from Feb. 11 and the solicitation period to June 13 from April 14, and it represents the company's ninth such extension.

An attorney for Asarco said Tuesday, "We are doing our best to have a plan ready to file by April 11."

The extension was needed, the company said, because agreements with its two largest creditor groups, environmental and asbestos, haven't yet been reached on terms of a consensual plan or the process for selecting a plan sponsor.

In addition, Asarco's parent, Asarco Inc., is seeking the appointment of an examiner in the case, and therefore, time and resources are needed to address that motion, according to its exclusivity extension request filing.

Defending equity interest

For its part, Asarco Inc. says it's seeking an investigation of whether settlements and plan negotiations were entered into in good faith, what the value of Asarco is, and whether the directors breached their fiduciary duties, in defense of its equity interest.

Judge Richard S. Schmidt has taken the motion to appoint an examiner under advisement and as of Tuesday hadn't issued a decision.

Asarco Inc. asserts that it has been denied access to information and that it offered to support a stand-alone plan that would pay creditors in full as well as deliver $300 million in financing from a third party to backstop the plan. Asarco hasn't responded substantively to the parent's offer, it said.

"This resistance to a 100% plan proposed by the equity of a solvent corporation clearly violates Asarco's duties to the parent. If the parent is prepared to support a plan which pays creditors 100% of what they are owned, any plan that proposes to pay less than 100% to creditors is obviously a breach of duty to those creditors as well. And once creditors are paid 100% it is only the equity holder's views on whether to retain or sell that equity interest that should have any weight," its motion states.

Both Asarco LLC and its unsecured creditors group have objected to the motion for the appointment of an examiner.

Asarco LLC called it the parent's "latest desperate attempt to undermine and delay Asarco's progress toward plan confirmation and emergence from bankruptcy."

It asserts that its parent has tried on four earlier occasions to gain control of decision-making authority. And with this latest motion, the parent presents no compelling argument as to why it should be permitted to gain a foothold: an independent board is in charge of Asarco's affairs and "a plan is being drafted, settlement negotiations continue, and the confirmation process is to begin in a matter of months."

Asarco, a Tucson, Ariz., mining company, filed for bankruptcy in August 2005. Its Chapter 11 case number is 05-21207.

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