Asarco granted court approval to loan $10 million to asbestos subsidiaries

By Caroline Salls

Pittsburgh, Sept. 22 - Asarco LLC received court approval to loan $10 million in intercompany debtor-in-possession financing to its asbestos subsidiary debtors, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

According to the motion, two escrow accounts established for payment of the asbestos subsidiary debtors' reorganization costs, fees and expenses are depleted.

Because the asbestos subsidiary debtors have no operations or income, Asarco said they are unable to obtain unsecured credit to continue to fund their reorganization fees, costs and expenses.

As a result, Asarco said it believes the intercompany DIP loan is the best way to assure that the subsidiary debtors can continue to pay their fees, costs and expenses while the parties move toward a global resolution of the company's asbestos liabilities.

The DIP facility will terminate on the earlier of April 1, 2009 and the effective date of a plan of reorganization submitted by the asbestos subsidiary debtors or Asarco.

Interest will be 5%.

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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