Asarco back under Americas Mining control after plan takes effect

By Caroline Salls

Pittsburgh, Dec. 9 - Asarco LLC's plan of reorganization, which was submitted by parent companies Americas Mining Corp. and Asarco Inc, took effect Wednesday, according to a release from Americas Mining parent Grupo Mexico, SAB de CV.

Grupo Mexico said the reintegration of Asarco follows U.S. District Court Judge Andrew S. Hanen's decision last month to approve the full payment reorganization plan, concluding the company's four-year Chapter 11 proceeding.

"Today marks the beginning of a new chapter for Asarco and Grupo Mexico," Asarco Inc. vice president and general counsel Jorge Lazalde said in the release.

"With Asarco now able to operate free of its burdensome asbestos and environmental liabilities, which will be fully satisfied under our plan, we believe the combined entity will create one of the world's strongest and most competitive copper producers."

As previously reported, the court-approved plan called for Americas Mining to make a $2.2 billion cash contribution to Asarco for distribution to creditors, to distribute an estimated $1.4 billion in cash on hand to creditors from Asarco's balance sheet and to guarantee Asarco's issuance of a one-year promissory note for $280 million payable to asbestos creditors.

In addition, the district court issued a channeling injunction that permanently resolves and enjoins all present and future asbestos-related claims against Asarco LLC, its subsidiaries and non-debtor affiliates.

The reorganization plan also resolves all of Asarco's historical environmental and toxic tort liabilities and satisfies in full all of the company's outstanding bonds.

To finance the plan, a syndicate of internationally recognized financial institutions has provided $1.5 billion in financing to Americas Mining.

Grupo Mexico said it contributed an additional $700 million to fund the $2.2 billion cash contribution on the closing date.

According to the release, the completion of the bankruptcy plan marks the return of full management and control of Asarco to Americas Mining, and the release of Americas Mining and Grupo Mexico from all bankruptcy-related claims.

Asarco, a Tucson, Ariz., mining company, filed for bankruptcy on Aug. 9, 2005 in the U.S. Bankruptcy Court for the Southern District of Texas. Its Chapter 11 case number is 05-21207.

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