Asarco parent's affiliate allowed to move forward with competing reorganization plan

By Caroline Salls

Pittsburgh, March 20 - Asarco LLC parent Asarco Inc.'s affiliate Grupo Mexico SAB de CV said the U.S. Bankruptcy Court for the Southern District of Texas did not approve the company's proposed break-up fee related to its plan sponsor selection process, and the company has been ordered to come back to court after it is more certain of its sale process, according to a news release.

In addition, Group Mexico said the court has entered a ruling that allows Group Mexico, through Asarco Inc., to continue with its efforts to present a competing plan of reorganization that either pays Asarco's creditors in full or reinstates current debts, "which would be a full payment plan with financial assurances, as needed."

Grupo Mexico said the proposed break-up fee would "disincentivize higher bids to the detriment of the creditors and Asarco Inc."

Asarco Inc.'s affiliate also said the court-appointed monitor has been granted the authority to monitor Asarco LLC's bidding process.

Grupo Mexico said it is concerned about Asarco's majority bondholders' agreement to support Asarco LLC's proposed sale process without the certainty of full payment when Asarco Inc. has offered to provide full payment on the company's bonds.

According to the release, the bondholders include Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, LP and Citigroup Global Markets, Inc.

Asarco, a Tucson, Ariz., mining company, filed for bankruptcy on Aug. 9, 2005. Its Chapter 11 case number is 05-21207.

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