Asarco awarded $6.04 billion in damages in America's Mining fraudulent transfer case

By Caroline Salls

Pittsburgh, April 2 - Asarco LLC has been awarded damages valued at $6.04 billion in connection with district judge Andrew Hanen's August 2008 ruling that Grupo Mexico SA de CV subsidiary America's Mining Corp. fraudulently transferred Asarco's 54.18% interest in Southern Peru Copper Corp. to America's Mining, according to a news release.

"Justice has ultimately prevailed," Asarco president and chief executive officer Joseph F. Lapinsky said in the release.

"This award is for the benefit of Asarco's creditors in the bankruptcy and should assist the company in its efforts to successfully emerge from Chapter 11 in the coming months."

As restitution, the judge ordered America's Mining to return to Asarco 260.09 million shares of Southern Copper Corp. stock, which, based on Wednesday's closing price is worth $4.68 billion, and pay $1.35 billion in monetary damages.

The monetary damages are comprised of $1.94 billion in dividends America's Mining received and $329 million in prejudgment interest on those dividends, less the $747 million that America's Mining paid for Southern Peru Copper in the 2003 transfer, together with $164 million in interest on that 2003 payment.

As a result, Asarco will own a 30% equity interest in Southern Copper, according to the release.

Asarco said the award represents return of the value of equity interest that it lost in the fraudulent conveyance, plus post-transfer dividends that the company would have been paid over the past six years had the transfer not taken place, as well as pre-judgment interest on those dividends.

Hanen is a U.S. district judge in Brownsville, Texas. He issued his liability opinion for the Southern Peru Copper transfer on Aug. 30, finding America's Mining liable for actual fraudulent transfer, aiding and abetting a breach of fiduciary duty and conspiracy.

Asarco's former parent Asarco Inc. is a wholly owned subsidiary of America's Mining that lost control of Asarco LLC in December 2005 when the U.S. Bankruptcy Court for the Southern District of Texas appointed an independent board of directors to manage the company.

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

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