By Emily Chasan and Mica Rosenberg
NEW YORK/MEXICO CITY, Sept 3 (Reuters) - U.S. copper miner
Asarco plans to seek around $8 billion in damages from Grupo
Mexico <GMEXICOB.MX> after a court ruling found the Mexican
miner harmed Asarco's creditors in a 2003 transfer of a
Peruvian mining unit, a lawyer for the company said on
Wednesday.
In a ruling on Aug. 30, U.S. District Judge Andrew Hanen,
found directors at Asarco's parent had breached their fiduciary
duty in the transaction and that Grupo Mexico made a
"fraudulent transfer" of Asarco's stake in Southern Peru Copper
Corp.
But in a complex ruling, Hanen also said Grupo Mexico had
not acted with malice and threw out punitive damages Asarco was
seeking in the case.
"We're asking that they disgorge or give back the stocks
and the dividends," said Irv Terrell, a lawyer at Baker Botts
who represents Asarco in the case.
Hanen, who sits in U.S. District Court in Brownsville,
Texas, has asked for a briefing on damages by Sept. 15 and
expects to rule shortly thereafter.
Southern Peru Copper Corp is now Southern Copper <PCU.N>, a
profitable unit of Grupo Mexico with a market value of more
than $6 billion. Terrell said additional damages were worth
close to $2 billion.
Lawyers for Asarco had argued in the case that Grupo
Mexico schemed to strip Asarco of one of its most valuable
assets, pushing the company toward insolvency.
Asarco, which owns three copper mines in Arizona, filed
for Chapter 11 bankruptcy protection in 2005 after it was sued
for $1 billion over environmental clean-up and asbestos claims.
Its total asbestos and environmental liabilities are estimated
to be at least $3 billion.
DIFFERING VIEWS
But Grupo Mexico took a different tack on damages, saying
what the company could end up paying is "far away" from the
billions of dollars Asarco seeks, Alberto de la Parra, the
Mexican miners' General Counsel said in an investor conference
call on Wednesday.
"The worst case scenario will be in the range of $50
million to a couple $100 million, but not more than that," said
De la Parra.
But analysts said the low end of Grupo Mexico's estimate is
unlikely.
"We believe that $83 million would be the floor that the
company would have to pay," said Dahlman Rose & Company in a
research note.
"We cannot rule out the possibility that the judge would
rule that Grupo Mexico would have to pay as much as $6.6
billion, as that would be the approximate present day value of
the shares," said the note.
The analysts said they could not recommend shares in
Southern Copper, Grupo Mexico's Peruvian unit, given the
uncertainty of the court case and the possibility of a massive payout.
Grupo Mexico is in a separate legal battle to win back
control over Asarco, which is run by an independent board due
to the bankruptcy and is trying to stop Sterlite Industries
Ltd's <STRL.BO><SLT.N> $2.6 billion bid for the U.S. miner.
Sterlite Industries, an Indian unit of London-listed
Vedanta Resources Plc <VED.L>, was the highest bidder in an
auction for Asarco's assets in May and has said it would buy
the operating assets of Asarco in an all-cash deal.
(Reporting by Emily Chasan and Mica Rosenberg; Editing by
Andre Grenon)
(([email protected] +1 646 223 6114; Reuters
Messaging: [email protected]))
Keywords: GRUPOMEXICO/DAMAGES