Asarco looks to terminate Sterlite agreement, draw on letter of credit

By Caroline Salls

Pittsburgh, Nov. 23 - Asarco LLC has requested emergency court approval to terminate its Sterlite (USA) Inc. purchase and sale agreement and to draw on a related $50 million letter of credit, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

The letter of credit was posted by Sterlite in favor of Asarco in connection with a $125 million purchase agreement deposit.

With its termination of the purchase agreement, Asarco said it has the right to receive and retain $50 million of the deposit.

As previously reported, the district court confirmed the plan of reorganization proposed by Asarco parent companies Asarco Inc. and Americas Mining Corp. and denied confirmation of Asarco LLC's plan, which was based on the Sterlite purchase agreement.

According to the motion, Asarco LLC's termination of the Sterlite agreement and drawing on the letter of credit is necessary for the company to proceed toward its emergence from bankruptcy.

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

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