Harbinger Seeks To Make Offer For Asarco

(Reuters) – Harbinger Capital, one of Asarco LLC’s largest bondholders, is seeking to offer its own $500 million reorganization plan for the bankrupt U.S. copper miner, battling India’s Sterlite Industries (STRL.BO) and Asarco’s parent Grupo Mexico (GMEXICOB.MX) for control of the company.

Asarco, which filed for bankruptcy in 2005 amid more than $1 billion in environmental damage and asbestos claims, is seeking to sell its assets to Sterlite for $1.7 billion as part of a bankruptcy reorganization plan that would allow Sterlite to take control of Asarco and offer payment to some of the company’s creditors.

But Mexican miner Grupo Mexico, which acquired Asarco in a leveraged buyout in 1999 but lacks board control of the company due to the bankruptcy, has made a $1.55 billion competing offer for Asarco and is asking the court to allow creditors to vote on its reorganization plan as well.

In a court filing on Thursday, private equity fund Harbinger joined the fray, saying it wanted to propose its own reorganization plan for Asarco because Sterlite and Grupo Mexico are “unreliable suitors” for the company.

“Faced with the poor options provided by the Debtors’ Current Plan and the Parent’s Current Plan and the substantial likelihood that neither plan can be confirmed, Harbinger has prepared its own plan,” Harbinger said in the court document.

Harbinger asked the court to terminate Asarco’s exclusivity period, so that various plans can compete against each other. Exclusivity gives the company the sole right to come up with its reorganization plan.

Harbinger, which is offering $500 million in cash and the assumption of certain liabilities for Asarco, asked the court for an emergency hearing on its request.

While offering less cash, Harbinger said its plan has a better chance of being approved than either of the others. Harbinger said the Sterlite plan cannot be confirmed because it will lack votes from asbestos creditors who have agreed to support Grupo Mexico’s plan.

And it believes its plan is better than Grupo Mexico’s because it would allow Asarco to keep a $6.87 billion judgment against the Mexican miner that arose from a dispute over the transfer of its one-time Peruvian mining unit, Southern Copper Corp (PCU.N).

Harbinger said along with Citigroup Global Markets (C.N), another large bondholder, it would vote to reject Grupo Mexico’s reorganization plan for Asarco.

Sterlite, an affiliate of London-listed Vedanta Resources Plc (VED.L), has been promised a break-up fee should its offer not go through.

Sterlite had made a $2.6 billion offer for Asarco last year, but backed out of that deal in October, saying it needed a substantial reduction in price after a drop in the copper markets. Months of negotiation resulted in the latest bid.

The case is In re: Asarco LLC, U.S. Bankruptcy Court, Southern District of Texas, No. 05-21207. (Reporting by Emily Chasan; additional reporting by Caroline Humer; editing by Gerald E. McCormick, Leslie Gevirtz)