Heat Treat Industry News
September 30, 2009
Grupo Mexico rises to 2-year high on liability offer
Grupo Mexico SAB rose to the highest in two years after Sterlite Industries (India) Ltd offered to limit the Mexican miner’s liability if the Indian rival wins a court case over US copper producer Asarco LLC.
Grupo Mexico gained 3.1% to 26.32 pesos in Mexico City trading, the highest closing price since November 2007.
Mexico’s biggest mining company lost control of Asarco after putting it into bankruptcy in 2005. Last year, US District Judge Andrew Hanen ruled that Grupo Mexico intentionally harmed Asarco before the bankruptcy by stripping the company’s stake in Southern Copper Corp Sterlite, which is in a bidding war for Asarco, said in a court filing it would collect no more than US$904 million on a potential US$9 billion judgment against Grupo Mexico if it succeeds in the takeover.
"If the Sterlite proposal is approved, it radically changes the situation for Grupo Mexico," said Rodrigo Heredia, an analyst with IXE Grupo Financiero SA in Mexico City. "It becomes a win-win for Grupo Mexico."
Sterlite and Grupo Mexico want to buy Asarco to gain control of the company’s copper mines in Arizona. Prices of the metal doubled this year on rising Chinese demand and optimism the U.S. economy will recover from a recession.
US Bankruptcy Judge Richard Schmidt in Corpus Christi, Texas, recommended last month that Grupo Mexico be allowed to regain control of Asarco by paying all creditors in full.
Mumbai-based Sterlite raised its offer for Asarco to US$2.57 billion in cash from US$2.14 billion and asked Schmidt to allow its new bid to be considered by the court that will make the final decision about which company wins Asarco.
Grupo Mexico is the best performing stock on the Bolsa index this year after retailer Controladora Comercial Mexicana SAB. The mining company’s shares have more than tripled in value from 8.49 pesos at the end of 2008.
Publishing Date 24 Sep 2009 11:43am GMT Author Mining Journal
(Bloomberg, Sep 23)
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