Asarco joint disclosure statement for competing plans gains approval

By Jennifer Lanning Drey

Portland, Ore., July 6 - A joint disclosure statement for three separate, competing Asarco LLC plans of reorganization proposed by the company, its parent and creditor Harbinger Capital Partners Master Fund I Ltd. was approved by the U.S. Bankruptcy Court for the Southern District of Texas, according to an attorney.

As previously reported, treatment of creditors under Asarco's plan will include:

• Holders of $441 million to $612 million in administrative claims, $4 million in priority tax claims, convenience claims and priority claims will recover 100% in cash;

• Holders of $28 million to $33 million in secured claims will either be paid in full in cash, plus interest, or have their claims reinstated;

• Holders of $2.1 billion to $2.3 billion in general unsecured claims will recover a percentage of cash based on the size of their claim plus interests in the litigation trusts and the residual assets liquidation trust;

• Holders of demand claims and unsecured asbestos personal injury claims will recover 100% through the asbestos trust;

• Holders of $4 million to $15 million in late-filed claims, subordinated claims, interests in Asarco, interests in the asbestos subsidiary debtors and interests in other subsidiary debtors will receive no distribution.

Parent plan

Treatment of creditors under Asarco parents Asarco Inc. and America's Mining Corp. plan includes:

• Holders of administrative, priority tax, priority and convenience claims will recover 100% in cash;

• Holders of secured claims will recover 100% either in cash, through the return of the collateral securing the claim or through reinstatement of the claim;

• Holders of asbestos personal injury claims will be paid through a section 524 (g) trust that will be funded with $500 million in cash, a secured one-year note in principal of $280 million and $27.5 million of additional cash;

• Holders of general unsecured claims, including bondholder claims, and holders of environmental unsecured claims will recover a share of available plan cash and a share of net litigation trust proceeds;

• If the holders of the general unsecured claims accept the parent's plan and express a preference for the plan, the parent will withdraw its objections to the company's environmental claim settlement motion and a district court order denying withdrawal of the reference to the bankruptcy court in connection with Asarco's residual Superfund and custodial trust settlement agreements.

If the holders of the general unsecured claims reject the plan, the parent will continue to pursue objections to the environmental custodial trust claims;

• Holders of reinstated environmental claims will have their claims reinstated to be assumed and paid by the applicable reorganized debtor;

• Holders of late-filed claims and subordinated claims will receive any remaining litigation trust interests; and

• Interests in Asarco will be canceled and holders will receive no distribution.

Harbinger plan

Under Harbinger's plan of reorganization, which was filed on May 27, Asarco would sell substantially all of its assets to a plan sponsor designated by Harbinger for $500 million. Harbinger said a majority of the sale proceeds will be used to pay plan creditors.

Plan creditor treatment will include:

• Holders of administrative claims, priority claims, convenience claims and priority tax claims will recover 100% in cash;

• Holders of secured claims will either recover 100% in cash or have their claims reinstated;

• Holders of general unsecured claims will recover 100% through their share of cash, liquidation trust interests and litigation trust interests;

• Holders of late filed claims, subordinated claims and interests in Asarco will receive liquidation trust and litigation trust interests in accordance with trust priorities; and

• Holders of interests in the asbestos subsidiary debtors and other subsidiary debtors will receive no distribution.

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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