Sterlite Industries, the flagship firm of London-listed Vedanta Resources, may consider legal action if the bankruptcy court favours Grupo Mexico's counter-offer of $4.1 billion for Asarco, the US copper mining giant.
Sterlite's takeover bid for Asarco hit a bump when a judge of a bankruptcy court in Texas signalled on Friday that he might give Grupo Mexico, Asarco's estranged corporate parent, a last chance to resume control of its US subsidiary.
Sources said Sterlite's offer is being accepted after considering the competitive bids, which gave it legal validity. Any move hampering Sterlite's buyout plans of Asarco will be questioned in the upper court, the sources added.
A Vedanta spokesperson declined to comment on the possible legal action.
Sterlite had signed an agreement with Asarco to buy the latter's Southern Arizona mines and other assets for $2.6 billion late last month.
The acquisition would give Sterlite, India's top non-ferrous metal producer, copper smelting capacity of 635,000 tonnes per year and proven copper reserves of 5 million tonnes.
Sterlite had emerged the bid winner in a competition that included Grupo Mexico, Swiss industrial conglomerate Glencore International AG, and a consortium of Harbinger Capital Partners and Citigroup Global Markets.
But the Mexican firm proposed to recapitalise Asarco at $4.1 billion, part of that amount coming from Asarco's own assets and the rest through a cash infusion from Grupo Mexico.
Under the proposal made by a Grupo Mexico attorney in federal bankruptcy court, the company would put up $2.7 billion, use $1 billion Asarco has on hand and then put in a further $440 million, if needed.
Supporting this offer, Asarco board member H Malcolm Lovett Jr said the directors needed to evaluate Grupo Mexico's proposal.
Asarco owns three copper mines in Arizona and filed for bankruptcy protection in 2005 after it was sued for $1 billion over environmental clean-up and asbestos claims. An ongoing lawsuit at Brownsville in Texas could cost the company up to $11 billion, said sources.
The critics of the proposed sale, including environmental groups and Grupo Mexico, argue that Vedanta's human rights and environmental track records make it an unfit buyer.
"Vedanta and its subsidiaries have been repeatedly accused of environmental and human-rights abuses stemming from their mining and smelting operations in India, Zambia and Australia," reported foreign media quoting environmentalists.
Sterlite shares were up 3.25 per cent and closed at Rs 795.45 on Monday.
