Sterlite Industries, a unit of Vedanta Resources, has sought a reduction in its earlier valuation for copper miner Asarco, due to the liquidity crisis and weak copper prices. Sterlite had earlier pegged the acquisition of the Arizona-based Asarco at $2.6 billion.
The company had earlier said it has cash reserves of Rs 20,000 crore. Asarco had filed for bankruptcy protection in August 2005. Sterlite is keen to acquire Asarco as the company owns three copper mines, a smelter in Arizona and a refinery in Texas, assets that would boost its strengths. Groupo Mexico, a previous owner of Asarco, is also in the fray.
The move to revalue Asarco follows a lull in copper prices after seeing a year long bull run that led the metal to record price levels. Sources said the schemes of both Sterlite and Groupo Mexico to buy Asarco are currently being evaluated by the creditors of Asarco, as per US bankruptcy norms, and a decision is expected after November 3. Sterlite’s move to reduce the price for Asarco is in addition to its earlier scheme.
If Sterlite drops out, it would be the second upset for Vedanta within a month; the metals major had earlier dropped a high-profile restructuring plan, at the last minute, after the liquidity crisis in the US made investors jittery.