$1.5 Billion Financing to Americas Mining Corporation to Fund ASARCO LLC’s Exit from Bankruptcy

December 10, 2009

Cleary Gottlieb represented a bank syndicate in connection with $1.5 billion in secured financing to Americas Mining Corporation (AMC), a subsidiary of Grupo México S.A.B. de C.V., to fund AMC’s plan of reorganization for its U.S. copper unit, ASARCO LLC. Banco Inbursa, BBVA Bancomer, Calyon and Credit Suisse led the bank syndicate.

ASARCO LLC commenced its chapter 11 cases in Corpus Christi, Texas over four years ago in the face of significant asbestos litigation, environmental liabilities and labor unrest. After considering several competing plans, including a plan proposed by ASARCO LLC that contemplated a sale of ASARCO LLC’s assets to an affiliate of Vedanta Resources, the district court confirmed AMC’s proposed plan. Under AMC’s plan, creditors will receive full payment of their claims, including interest and AMC will retain its ownership of ASARCO LLC. In addition, the plan provides for the release and dismissal of a landmark multibillion dollar fraudulent conveyance judgment against AMC related to its spin-off of Southern Copper Corporation.

The financing was a integral component of AMC’s plan and was necessary to pay creditors in full. The initial commitment letter included limited conditionality, designed to support AMC’s arguments, which were adopted by the court, that AMC’s plan was feasible as required under the Bankruptcy Code. For example, there was no material adverse change condition and the banks agreed to fund even if the court order approving the AMC plan was appealed (as it has been). Another notable aspect of the financing is that the credit is supported primarily by a pledge of shares of AMC’s publicly-traded subsidiary Southern Copper.

Cleary Gottlieb’s work on this innovative form of exit financing exemplifies the firm’s expertise in complex corporate financings and bankruptcy matters.