Mexico

A judge has signed off on a deal to allow India-based Sterlite Industries Ltd. to buy bankrupt mining firm Asarco LLC for $1.7 billion, while leaving the door open for Asarco parent Grupo Mexico SAB to file a competing plan, Bankruptcy Law360 reported. Read more. (Subscription required.)

Asarco LLC, the bankrupt Grupo Mexico SAB unit, must wait for a ruling on its proposed sale to Sterlite Industries Ltd., India’s biggest copper producer, for $1.1 billion in cash and a $600 million note. U.S. Bankruptcy Judge Richard Schmidt declined to rule on Asarco’s request to sign a sale contract with Sterlite at a hearing today in Corpus Christi, Texas. Lawyers for the buyer said they would try to get an extension of tomorrow’s deadline to allow the judge more time to reach a decision.

Mexican mining company Grupo Mexico SAB threw a fresh punch in its fight to retain U.S. copper subsidiary Asarco LLC, pledging $1.3 billion in cash to take the unit out of Chapter 11 proceedings and defeat a rival bid by Vedanta Resources PLC, The Wall Street Journal reported. Though Vedanta's deal to acquire Asarco has a higher total--$1.7 billion--it includes just $1.1 billion in cash, plus a note for $600 million. A U.S. bankruptcy judge will have to determine which offer better serves Asarco's many creditors, including the U.S.

Any bankruptcies among U.S. automakers could further batter Mexico's auto industry, push some parts suppliers to the breaking point and spur tens of thousands of layoffs, a Reuters analysis has found. Fears are mounting that General Motors Corp and Chrysler LLC could be lurching toward bankruptcy. A Chapter 11 filing by either automaker could upset Mexican assembly lines and disrupt the flow of cash to auto parts makers, possibly spurring bankruptcies among the smallest or those already facing liquidity problems, analysts say. Mexican subsidiaries of U.S.

Corporacion Durango SAB, the Mexican papermaker that filed for bankruptcy in October, rose to the highest in six months after saying it may present a debt restructuring plan at its shareholder meeting in two weeks, Bloomberg reported. A restructuring plan, which may include issuing new dollar-denominated debt, is scheduled for presentation at the April 23 shareholder meeting, Durango said today in a statement to the Mexico stock exchange. The Mexico City-based company may also propose issuing new shares.

Grupo Mexico SAB, Mexico’s largest mining company, was ordered by a U.S. judge to pay Asarco LLC about $6 billion in damages over a lawsuit related to Asarco’s bankruptcy case, Bloomberg reported. U.S. District Judge Andrew Hanen in Brownsville, Texas, yesterday ruled that Grupo Mexico must return Asarco’s 30 percent stake in Peruvian copper miner Southern Copper Corp. and pay $1.9 billion in related dividends and interest. Hanen found Aug. 30 that Grupo Mexico’s Americas Mining Corp. unit harmed Asarco creditors by stripping the company’s stake in Southern Copper.

Troubled retailer Comercial Mexicana is due to file a third restructuring plan this week in a fresh bid to keep creditors at bay as talks to restore its financial health drag on. A source close to the negotiations told Reuters on Tuesday that the company, known as Comerci, and its creditors are getting closer to finding a way to restructure its heavy debt load. Comerci defaulted in October after massive derivatives losses sent its debt soaring above $2 billion.

Twice in the last three decades, Mexico has demonstrated that one country’s profligacy and mismanagement can spell economic catastrophe beyond its borders. In 1982, the country defaulted on its foreign debt and set off a Latin American debt crisis that led to a decade of anemic growth across the region. In 1994, the peso collapsed and halted capital flows to emerging markets around the world, until the Clinton administration arranged a $50 billion Mexican bailout.

Pepsi Bottling Group Inc., the world's second-largest soft-drink distributor, lowered its 2008 earnings forecast and said it will eliminate 4.6 percent of its workforce in North America, Europe and Mexico, Bloomberg reported. Pepsi Bottling, which is 33 percent-owned by PepsiCo Inc., will cut 3,150 jobs, mostly in Mexico. Earnings per share will be $2.20 to $2.26 this year, down from the $2.32 to $2.38 Pepsi Bottling forecast in June, the Somers, New York-based company said today in a statement. The shares fell in New York trading.

Eighty-five companies worldwide defaulted on their debt in the year through November 11, impacting a total of $284 billion, up sharply from the two previous years, Standard & Poor's said Monday. By comparison, there were only 22 defaults for all of 2007 and 30 in 2006, Reuters reported. Seventy of the 85 companies are based in the United States, five in Europe, four in Asia, three in Canada, two in Mexico and one in Russia, according to Diane Vazza, head of S&P's fixed income group.