Grupo México Reorganization Plan for ASARCO Confirmed by District Court

The decision, handed down by Judge Hanen late Friday, November 13, from his courtroom in Brownsville, Texas, will return control of ASARCO to Americas Mining Corp. (AMC), a GMEXICO subsidiary. GMEXICO's reorganization plan was chosen over a competing plan submitted by Sterlite Industries (USA), Inc., a subsidiary of Vendanta Resources. Judge Hanen's decision confirmed a previous recommendation from U.S. Bankruptcy Court Judge Richard Schmidt, who presided over a three-week confirmation trial and had previously ruled in favor of GMEXICO's plan. The transaction is now expected to close by mid-December.

"We are very pleased that Judge Hanen approved our reorganization plan and look forward to consummating the transaction to bring to a close what has been a lengthy bankruptcy restructuring process that will result in a stronger, more vibrant ASARCO and an important contributor to GMEXICO’s global mining operations," said Jorge Lazalde, vice president and general counsel of ASARCO Inc. "Throughout this bankruptcy process, GMEXICO’s goal has been to bring ASARCO out of bankruptcy in a manner that treats its creditors and employees fairly, and leaves the company in the strongest financial position possible. Our plan not only accomplishes those goals, but will allow us to achieve our original vision when we acquired ASARCO in 1999 of capitalizing on the significant synergies that exist between ASARCO and GMEXICO’s other operations around the world while enhancing the quality products and dependable services GMEXICO and ASARCO provide to their customers.

"We are very appreciative of the judges, court officers and other interested parties who worked so hard to achieve the best possible result for ASARCO during this process. We are looking forward to rekindling our relationships with the company, its employees and the communities in which ASARCO operates and ensuring that ASARCO will thrive as a strong, competitive company going forward."

The court-approved plan, among other things, calls for GMEXICO to make a $2.2 billion cash contribution to ASARCO for distribution to creditors, additionally disburse an estimated $1.4 billion in cash on hand from ASARCO’s balance sheet, guaranty ASARCO’s issuance of a one-year promissory note for $280 million payable to the asbestos creditors, forgive $161 million worth of ASARCO upstream tax obligations to AMC, and release AMC’s claim to a $60 million tax refund which will instead remain with ASARCO’s operations.

To finance the plan, a syndicate of internationally recognized financial institutions have committed to deliver up to $1.4 billion in financing to AMC which, in addition to GMEXICO's commitment to contribute up to an additional $800 million, will fund a $2.2 billion cash contribution on the closing date. AMC has ensured its commitment to promptly close the confirmed Plan by posting a $2.2 billion forfeitable good faith deposit of cash and securities.

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