Anil Agarwal-led Sterlite Industries has acquired the US-based bankrupt copper miner Asarco LLC for $1.7 billion. The two companies signed an agreement on Saturday, according to which Tuscon based Asarco will sell "substantially all of its operating assets" to Sterlite (USA), Inc., a subsidiary of Sterlite Industries (India) Ltd. and Vedanta Resources plc.
The sale price is $1.1 billion cash plus a senior secured, non-interest bearing promissory note for $600 million, payable over nine years. It's less than the original $2.6 billion offer made by Sterlite last year. The Indian company had withdrawn from the race last year saying that price was too high as the price of copper was declining.
The operating assets to be sold include three copper mines, associated mills and SX-EW plants in Arizona; a copper smelter in Arizona; and a copper refinery, rod and cake plants and precious metals plant in Texas. The sale is part of Asarco's plan to reorganise under chapter 11 of the US bankruptcy code.
“Reaching this agreement in such difficult economic times is a tribute to our Board of Directors and principal creditor groups,” said Joseph F. Lapinsky, President and Chief Executive Officer of Asacrco. “It is satisfying to see months of negotiations finally bear fruit in an agreement that achieves value for all concerned,” he said..
However, Asarco is free to solicit and negotiate other offers until the bankruptcy court approves certain portions of the new agreement. Following court approval, a “no shop” restriction goes into effect. Asarco expects the court approval to occur by April 15, 2009.
Asarco's parent Grupo Mexico was also in the race to take back the control of Asarco. Grupo Mexico had put Asarco into bankruptcy in 2005 and lost control of it. It's not clear if Grupo Mexico is still interested in putting in a bid.
Asarco is also facing a host of law suits for the environmental and health risks caused by its asbestos products.
Asacro is an integrated copper mining, smelting and refining company based in Tucson, Arizona ,with approximately 2500 employees. Formerly known as American Smelting and Refining Company, Asarco is 110 years old and currently is the third largest copper producer in the United States. It sold 237,000 tons of refined copper in 2008 and had revenues of approximately $1.9 billion. ASARCO’s mines currently have estimated reserves of approximately 5 million tons of contained copper.
Sterlite Industries is an Indian non-ferrous metals and mining company with interests and operations in aluminum, copper, zinc and lead. It is a subsidiary of Vedanta Resources plc, a London-based diversified FTSE 100 metals and mining group company.
Advisors In The Deal
Barclays Capital acted as financial advisor and Baker Botts L.L.P. acted as legal advisor to Asacrco in this transaction.
RBS Securities, a part of the RBS Group, acted as financial advisor and Shearman & Sterling acted as legal advisor to Sterlite in this transaction.