In its latest effort to regain control of Tucson-based Asarco LLC, Grupo Mexico SA is asking a federal bankruptcy judge to force Asarco to open its books to Grupo's financial adviser.
Asarco's corporate parent said in papers filed Friday that it wants to look at its subsidiary's finances to determine "if, as it suspects, it can propose a plan that pays all creditors in full" while allowing it to retain ownership of Asarco.
Grupo Mexico said its financial adviser, UBS AG, needs to meet with Asarco to pursue a reorganization plan that would pay the company's creditors in full. If Asarco balks, Grupo Mexico wants Bankruptcy Judge Richard Schmidt to alter a 2005 deal that created a three-person board to manage the company's mining operations.
Under that deal, Asarco is run by a three-member board of directors, only one of whom is named by Grupo Mexico, Asarco's sole shareholder.
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Asarco, at 1150 N. Seventh Ave., is Southern Arizona's 23rd-largest employer, with 1,950 full-time-equivalent jobs, according to the Star 200 survey of the region's employers. The company owns and operates the Mission mine, near Sahuarita; the Silver Bell mine, near Marana; and the Ray mine, near Kearny; as well as a smelter at Hayden.
Schmidt essentially took control of Asarco away from Grupo Mexico when he issued a court order on Dec. 15, 2005, authorizing the three-member board to run the company's operations. While Asarco is still wholly owned by a Grupo Mexico subsidiary, under bankruptcy law the company is responsible to its creditors rather than its owner.
But Grupo Mexico believes Asarco is now solvent. Since the board took control, Grupo Mexico argues that Asarco's financial situation "has changed significantly, with higher copper prices leading to greater stability."
Asarco's healthier financial profile also has led to takeover speculation, with Glencore International AG and Washington Corp., along with hedge fund Harbinger Capital Partners, all rumored to be interested in Asarco's business.
Grupo Mexico said its "fundamental problem" with Asarco's board is that it "views the parent as one of many bidders," court papers said.
Over the past five months, Asarco has generated average net revenue of $115 million per month, according to court papers. Due to a windfall from rising copper prices, the company's coffers were flush with $492 million in cash at the end of last month.
Previously, Grupo Mexico had sought permission to add two members to Asarco's three-person board, which would allow the parent company to effectively regain control of its subsidiary. But last month Schmidt rejected the bid, saying it wasn't in Asarco's "best interests."
However, the judge said that if Grupo Mexico "could show me they have money to pay every claim, I'd give you back control — no question about that."