Asarco Wins Damages from GMexico Sub

Grupo Mexico shares dropped 15% Thursday after a Texas judge ordered a subsidiary to pay damages to Asarco that the intended recipient values at $6.04bn. According to Asarco, the ruling stems from a judge’s decision last August that Americas Mining Corporation (AMC), a subsidiary of Grupo Mexico, had fraudulently transferred to itself Asarco’s 54.18% interest in Southern Peru Copper Corporation (SPCC). The judge has ordered that AMC return to Asarco 260m shares of SPCC, which based on Wednesday’s closing price is worth approximately $4.68bn, and pay damages of approximately $1.35bn. The cash damages are comprised of dividends AMC received of $1.94bn and prejudgment interest on those dividends of $329m, less the $747m that AMC had paid for SPCC in the 2003 transfer, together with $164m interest on the payment. Asarco says it will own an approximate 30% equity interest in SPCC. “The award represents return to Asarco of the value of equity interest that it lost in the fraudulent conveyance, plus post-transfer dividends that Asarco would have been paid over the past 6 years had the transfer not taken place, and pre-judgment interest on those dividends,” says Asarco. “This award is for the benefit of Asarco’s creditors in the bankruptcy and should assist the company in its efforts to successfully emerge from Chapter 11 in the coming months,” says Joseph Lapinsky, president and CEO of Asarco. India’s Sterlite Industries said last month that it is buying the operating assets of US-based Asarco from Grupo Mexico for $1.1bn in cash and $600m in notes. Grupo Mexico bought Asarco in 1999 for $1.2bn, and Asarco subsequently went bankrupt. It is unclear how Grupo Mexico could raise enough funds to pay the damages. The company’s market cap was around $6.14bn Thursday.