Asarco parent files plan based on $1.3 billion cash contribution

By Jennifer Lanning Drey

Portland, Ore., May 18 - Asarco LLC's parent company, Asarco Inc., and America's Mining Corp. filed an amended plan of reorganization to compete with Asarco's LLC's currently proposed plan, according to a Friday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

Under the plan, the parent would contribute $1.3 billion of cash in exchange for new equity interests in reorganized Asarco.

If the parent's plan is confirmed, it would also waive all administrative and general unsecured claims against Asarco.

In addition, as well as providing a cash contribution for holders of asbestos personal injury claims and demands, the parent will provide a $250 million Asarco note supported by a pledge of 51% of the new equity interests.

The parent also said a possible $3.0 billion claim against Sterlite (USA) Inc. may be available to fund the working capital needs of reorganized Asarco.

The parent said it is confident there will be sufficient cash to address all reinstated obligations in the course of ordinary business if its plan is approved.

Creditor treatment

Creditor treatment under the plan includes:

• Holders of administrative, priority tax and priority claims will recover 100% in cash;

• Holders of secured claims will recover 100% either in cash, through the return of the collateral securing the claim or through reinstatement of the claim;

• Bondholders holding $439.8 million of claims will recover 75% in cash;

• Holders of $1 billion of asbestos personal injury claims will recover 75% through a section 524 (g) trust that will be funded with $500 million in cash, a secured one-year note in principal of $250 million and $27.5 million of additional cash;

• Holders of $264.6 million to $381.8 million of general unsecured claims and holders of up to $1.4 billion of environmental unsecured claims will recover 75% in cash;

• Holders of up to $261.3 million of environmental trust claims will have their claims reinstated, assumed by the environmental liquidation trust and administered with the environmental liquidation trust agreement.

• Holders of reinstated environmental claims will have their claims reinstated to be assumed and paid by the applicable reorganized debtor;

• Holders of late-filed claims subordinated claims and will receive no distribution under the plan; and

• Interests in Asarco will be cancelled.

Asarco, a Tucson, Ariz., mining company, filed for bankruptcy on Aug. 9, 2005. Its Chapter 11 case number is 05-21207.

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