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DENVER — Sterlite Industries Ltd. raised its bid Friday for Asarco LLC by 20 percent to $2.57 billion in cash, topping rival Grupo Mexico's offer to regain control of the mining company that has been operating under bankruptcy protection.
Mumbai-based Sterlite said the bid was revised to provide full cash payments to asbestos creditors and surplus cash after closing for Asarco's operations.
Grupo Mexico spokesman Tom Johnson declined immediate comment.
The latest offer came nearly two weeks after U.S. Bankruptcy Judge Richard Schmidt recommended Grupo Mexico be allowed to reacquire Tucson, Ariz.-based Asarco. The Mexico City-based conglomerate lost control over Asarco shortly after its subsidiary filed for bankruptcy four years ago.
He said its $2.2 billion bid is more likely to fully repay creditors than Sterlite's $2.1 billion offer.
His recommendation went to a federal judge in Texas who is expected to make a final decision on Asarco's future sometime this fall.
The two global companies are vying for Tucson, Ariz.-based Asarco's assets, including three Arizona mining operations and a Texas refinery.
A key issue in the bankruptcy case is a separate more than $6 billion civil conviction against Grupo Mexico in which U.S. District Judge Andrew Hanen found it fraudulently transferred stock in Southern Copper Corp., a Peruvian mining company, away from Asarco. Grupo Mexico had appealed that decision.
In a brief filed late Thursday, Asarco attorney Jack Kinzie asked the bankruptcy judge to reconsider his recommendation, noting the new Sterlite plan "offers consideration equal to or better than the parent's plan with less risk."
Schmidt's recommendation discounted creditor preferences and underestimated the potential for labor strife if the Grupo Mexico plan is confirmed, Kinzie said.
Attorneys representing Sterlite and the United Steelworkers Union also asked the judge to reconsider.
Sterlite attorney Alfredo Perez objected to Schmidt's recommendation against creditors' wishes in favor of Grupo Mexico, as equity holder.
"For this court now to find that such a party has an unfettered right to reacquire control and to push aside a plan of reorganization preferred by the very creditors whom they defrauded would be inequitable and unwise in the extreme," he wrote in a court brief.
Asarco filed for Chapter 11 reorganization in bankruptcy court four years ago when it ran out of cash and faced hefty environmental liability and potential asbestos-related claims.
Grupo Mexico lost control when independent directors were placed on the board.
Asarco, its employees and many creditors favored the Sterlite bid as the best for the company's future. Sterlite is a subsidiary of Vedanta Resources PLC in London.
Schmidt said both plans could be confirmed, but in recommending Grupo Mexico he considered the feasibility of each plan and how creditors, who claim to be owed about $3.58 billion, would be treated under each plan.
