Asarco: Sesa Sterlite bid to stay $82.75 million turnover order denied

By Caroline Salls

Pittsburgh, Aug. 20 – Asarco LLC purchase agreement party Sesa Sterlite Ltd.'s bid for a stay of a U.S. Bankruptcy Court for the Southern District of Texas judgment ordering it to turn over to Asarco $82.75 million in connection with a breach of purchase agreement was denied by the U.S. District Court for the Southern District of Texas, according to a news release.

The bankruptcy court awarded Asarco the damages in 2012. Sesa Sterlite refused to pay the judgment for more than two years, the release said, prompting the turnover order. That order requires Sesa Sterlite to turn over cash, assets and property sufficient to satisfy the judgment.

The turnover order also prevents Sesa Sterlite and all persons acting in concert with Sesa Sterlite from transferring, concealing or otherwise disposing of Sesa Sterlite’s property until further order from the bankruptcy court.

In seeking a stay, Sesa Sterlite argued that the order unfairly restricted its continuing business operations, including prohibiting it from making Aug. 8 dividend payments to the holders of its American Depositary Shares.

According to the release, the turnover order also affects Sesa Sterlite’s $500 million in 4% convertible senior notes due Oct. 30 in the U.S. debt market.

If Sesa Sterlite fails to pay the judgment to Asarco by Oct. 30, the turnover order prohibits and enjoins Sesa Sterlite and those acting in concert with it from making or transferring principal and interest payments on the notes.

“Sterlite agreed to be governed by United States law back in 2008 when doing so was to its advantage and only complains now when it may be brought to answer for its 2008 breach of contract,” the district court said.

Asarco, a Tucson, Ariz., mining company, emerged from bankruptcy in December 2009.

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