It looks like there is light at the end of the tunnel for Asarco, which announced it is finally emerging from bankruptcy after more than two and a half years. The copper-mining company said it will sell all of its assets and has established a process for interested buyers to submit offers, according to the Associated Press, citing papers filed with the U.S. Bankruptcy Court in Corpus Christi, Texas.
The decision to sell the assets is the result of discussions with creditors, according to the report. The company, a unit of Mexican mining company Grupo Mexico SA, said it has held discussion with six bidders who have expressed interest in funding the company’s exit from bankruptcy. However, it did not disclose the names of potential buyers in court papers. Grupo Mexico had bought Asarco in 1999 for $817 million, beating out Phelps Dodge in a bidding war.
At press time, Asarco and Grupo Mexico could not be reached for comment regarding their plans for the mining company following sale of the assets.
Asarco filed for bankruptcy in August 2005 to reign in about $6.5 billion in environmental liabilities. The company also faces 95,000 asbestos-related claims that could total more than $2 billion.
Last June, Asarco received Bankruptcy Court approval to pay as much as $11.3 million in extra wages and bonuses to retain employees.
After Asarco was sold to Grupo Mexico, the Mexico City-based company announced that to help pay down the acquisition debt, it would begin to divest Asarco of assets. The most valuable, a mining operation in Peru, was to be sold to another Grupo Mexico subsidiary, American Mining Corp.
The sale was blocked, however, by the U.S. Department of Justice, which claimed the deal was a fraudulent transfer of lucrative assets at below-market prices. The DoJ’s main concern was that Asarco — stripped of its most productive revenue-generating assets — would be unable to fund the cleanup of at least 27 polluted mining sites in 13 states.
In January 2003, the DoJ approved the asset sale for $765 million, more than $100 million higher than the price the department had originally contested; $550 million was used to pay down short-term debt. Asarco also earmarked $100 million for a trust fund whose proceeds would pay for environmental remediation of the U.S. mining sites over the next seven years.
During its bankruptcy, Asarco negotiated a new labor agreement with the United Steelworkers, restored production capacity, and has reaped the benefits of rising copper prices, the AP pointed out. In addition, early in the bankruptcy the court established an independent board to run Asarco.