Asarco creditor seeks exclusivity termination to file competing plan

By Caroline Salls

Pittsburgh, May 22 - Harbinger Capital Partners Master Fund I Ltd. has asked a federal court to terminate Asarco LLC's exclusivity to allow Harbinger to file a competing plan of reorganization for Asarco's bankruptcy case, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

According to the motion, Asarco was granted a 14th extension to its exclusive periods to file and solicit votes on a plan on May 12, but the court still indicated that it would "move mountains" to get any viable competing plan through the plan confirmation process.

"The court's desire to consider other plans is well-founded," Harbinger said in the motion.

"There are substantial risks that the debtors will not be able to confirm their current plan or close the new Sterlite sale embodied in the plan."

In addition, Harbinger said a plan submitted by Asarco parents Americas Mining Corp. and Asarco Inc. also violates several confirmation requirements and "presents even more confirmation risk than the debtors' plan."

As a result, Harbinger said it would be prepared to present a plan immediately upon termination of the company's exclusivity that does not include the same confirmation risks as the other two plans.

Specifically, Harbinger said its plan:

• Does not require a 524(g) trust or any extraordinary court rulings regarding the company's asbestos liability;

• Preserves and allows Asarco's creditors to benefit from the company's valuable litigation claims against both Sterlite and the parent companies;

• Eventually pays all creditors 100% of their claims with interest because it retains all of the company's litigation rights;

• Clearly satisfies the hypothetical Chapter 7 liquidation test, the feasibility test and the absolute priority rule;

• Does not discriminate unfairly among classes of creditors; and

• Has virtually no risk of union rejection.

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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