Creditors to Vote on Asarco Copper Mines Bankruptcy Exit Plans

A US judge cleared the way for creditors of bankrupt copper miner Asarco LLC to vote on competing plans filed by two suitors to restructure the company and allow it to exit bankruptcy protection, Asarco said on Tuesday.

Judge Richard S Schmidt, of the US bankruptcy court in Corpus Christi, Texas, approved a plan filed by Asarco and sponsored by a $2.6bn bid for the company from Sterlite, as well as a competing plan from its Mexican parent company Grupo Mexico.

Asarco, which owns three copper mines in Arizona, filed for Chapter 11 bankruptcy protection in 2005 after it was sued for more than a $1bn in environmental clean-up costs.

Grupo Mexico, which lost control of Asarco's board due to the bankruptcy, is trying to stop Sterlite Industries Ltd's bid for the US miner.

Asarco said its plan will include a $1.6bn cash settlement, including interest, to federal and state governments for the pollution and asbestos claims.

The creditors will receive a ballot to vote for or against one or both plans and then the judge will make a final ruling on the case taking into account the creditors' opinion, a Grupo Mexico representative told Reuters .

Bankruptcy court hearings to officially confirm the bankruptcy plan will begin the week of 17 November, Asarco said.

In a separate case in Brownsville, Texas, Asarco filed papers on Monday seeking more than $8bn in damages, after a judge found Grupo Mexico harmed Asarco's creditors in a 2003 transfer of a Peruvian mining unit, now known as Southern Copper.

Grupo Mexico said it did not feel Asarco was entitled to that sum and that the Southern Copper shares should not be returned to it.

The Brownsville judge is expected to decide on damages in the case in the next few weeks.

By Mica Rosenberg and Emily Chasan, Reuters