Fri, Nov 21, 2008
At a press conference, state Rep. Pete Rios, right, discusses his support for Sterlite Industries and its quest to buy Asarco. Sitting next to him is C.V. Krisnan of Vedanta Resources, parent company of Sterlite.
howard fischer / capitol media services

Business

Officials line up behind Sterlite's bid for Asarco

By Howard Fischer
Capitol Media Services
Tucson, Arizona | Published: 07.22.2008
PHOENIX — Some state legislators and local officials are urging a federal bankruptcy court to reject efforts by Grupo Mexico to reacquire Tucson-based Asarco.
At a press conference Monday, Reps. Pete Rios, D-Dudleyville, and Barbara McGuire, D-Kearny, said the best interests of the state would be served by having India-based Sterlite Industries own the company. They were joined by supervisors from Gila and Pinal counties as well as by the mayor of Hayden, all of whom complained about the practices of Asarco under Grupo Mexico's ownership, including failing to pay its taxes.
Instead they threw their support behind the acquisition bid of Sterlite Industries Ltd., a subsidiary of India-based Vedanta Resources PLC.
Rios acknowledged that Vedanta is a relative unknown, with the effort to obtain Asarco its first U.S. venture. But Rios said he does know something about Grupo Mexico, saying that company's operation and its failure to pay taxes forced him to introduce legislation in 2004 to restructure the school district's debt.
"I don't want them back in the community," he said of the company that bought Asarco in 1999. "I would rather take my chances with an unknown commodity."
The Sterlite offer to take Asarco out of bankruptcy also has gained the backing of the United Steelworkers union.
Manny Armenta, the union's subdistrict director, said Sterlite officials already have agreed to a contract running through 2013, with a promise to renegotiate by the end of 2010.
Armenta said that deal includes "interest arbitration," meaning that a neutral third party decides between the last offer of each side and decides which is more reasonable. He said that avoids the chances of a strike.
At stake is who will operate Asarco, which has three mines and a smelter in Arizona.
The company, which refines more than 500 million pounds of copper annually, filed for protection from creditors in 2005. Earlier this year, Sterlite made a $2.6 billion bid to buy Asarco's assets.
Since that time, Grupo Mexico, which had at one time owned Asarco, has said it wants the company back. And the bankruptcy judge has authorized the Mexico City-based company to make a competing bid.
It is the possibility of reacquisition by Grupo Mexico that led to the opposition from the state and local elected officials.