<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
(AMENDMENT NO. 1)
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D) (1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
AMENDMENT NO. 5 TO
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
------------------------
ASARCO INCORPORATED
(Name of Subject Company)
ASMEX CORPORATION
AND
GRUPO MEXICO, S.A. DE C.V.
(Bidders)
------------------------
COMMON STOCK, NO PAR VALUE
(INCLUDING THE ASSOCIATED JUNIOR
PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS)
(Title of Class of Securities)
------------------------
04341310
(CUSIP Number of Class of Securities)
------------------------
Daniel Tellechea Salido
Managing Director for Administration and Finance
Grupo Mexico, S.A. de C.V.
Baja California 200
Colonia Roma Sur
06760 Mexico City, Mexico
Telephone: 011-525-574-2067
(Name, Address and Telephone Number of Person Authorized To
Receive Notices and Communications on Behalf of Bidders)
COPY TO:
Lori Anne Czepiel, Esq.
Brown & Wood LLP
One World Trade Center
New York, New York 10048
Telephone: (212) 839-5300
Facsimile: (212) 839-5599
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
Transaction Valuation* $1,062,632,096
Amount of Filing Fee** $ 212,527
</TABLE>
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* Estimated for purposes of calculating the filing fee only. This filing fee
calculation assumes the purchase of 36,021,427 shares of Common Stock,
without par value, of ASARCO Incorporated at a price of $29.50 per share in
cash without interest.
** Calculated as 1/50 of 1% of the transaction value in accordance with Rule
0-11(d) of the Securities Exchange Act of 1934, as amended.
/X/ Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, of the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C>
Amount Previously Paid:............ $186,594
Filing Party:...................... ASMEX Corporation and Grupo Mexico, S.A. de C.V.
Form or Registration No:........... Schedule 14D-1 and Amendment No. 4 to Schedule 13D
Date Filed:........................ September 27, 1999
</TABLE>
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<PAGE>
This Amendment No. 1 to the Tender Offer Statement on Schedule 14D-1 and the
Schedule 13D as the same may have been amended from time to time (as amended
hereby, the 'Statement') relates to the offer by Grupo Mexico, S.A. de C.V., a
Mexican corporation ("Parent") through its wholly owned subsidiary, ASMEX
Corporation, a Delaware corporation ("Purchaser"), to purchase all of the
outstanding shares of common stock, without par value (together with the
associated junior participating preferred stock purchase rights, the "Common
Stock"), of ASARCO Incorporated, a New Jersey corporation (the "Company"), at a
purchase price of $29.50 per share of Common Stock, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated September 27, 1999 (the "Offer to Purchase"), a
copy of which is attached to this Statement as Exhibit (a)(1), and as amended
and supplemented by the Supplement thereto, dated October 8, 1999 (the
"Supplement") a copy of which is attached to this Statement as Exhibit (a)(10),
and in the related Letter of Transmittal, a copy of which is attached to this
Statement as Exhibit (a)(2) (which, as may be amended or supplemented from time
to time, together with the Offer to Purchase constitute the "Offer").
ITEM 1. SECURITY AND SUBJECT COMPANY.
Item 1 is hereby amended and supplemented by the following:
(b) The information set forth in the "INTRODUCTION" and "Section 1--Terms of
the Offer; Expiration Date" in the Supplement is incorporated herein by
reference.
(c) The information set forth in "Section 3--Price Range of Shares;
Dividends" in the Supplement is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
Item 3 is hereby amended and supplemented by the following:
(a)-(b) The information set forth in the "INTRODUCTION" and "Section
5--Background of the Offer; Contacts with the Company" in the Supplement is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 4 is hereby amended and supplemented by the following:
(a) The information set forth in "Section 4--Source and Amount of Funds" in
the Supplement is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES
Item 7 is hereby amended and supplemented by the following:
The information set forth in the "INTRODUCTION" and "Section 5--Background
of the Offer; Contacts with the Company" in the Supplement is incorporated
herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
Item 10 is hereby amended and supplemented by the following:
(b)-(c) The information set forth in "Section 7--Certain Legal Matters;
Regulatory Approvals; Certain Litigation" in the Supplement is incorporated
herein by reference.
2
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ITEM 11. MATERIAL TO BE FILED AS EXHIBITS
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(a)(1) Offer to Purchase dated September 27, 1999.*
(a)(2) Form of Letter of Transmittal.*
(a)(3) Form of Notice of Guaranteed Delivery.*
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.*
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.*
(a)(6) Form of Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.*
(a)(7) Form of Summary Advertisement dated September 27, 1999.*
(a)(8) Press release of Parent dated September 24, 1999.*
(a)(9) Press release of Parent dated September 27, 1999.*
(a)(10) Supplement to the Offer to Purchase dated October 7, 1999.
(a)(11) Press release of Parent dated October 7, 1999.
(b)(1) Commitment Letter from The Chase Manhattan Bank and Chase Securities Inc.
dated September 24, 1999.*
(b)(2) First Amended and Restated Commitment Letter from The Chase Manhattan Bank and
Chase Securities Inc. dated October 5, 1999.
(b)(3) Second Amended and Restated Commitment Letter from The Chase Manhattan Bank
and Chase Securities Inc. dated October 7, 1999.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) None.
(g)(1) 1997 Annual Report of Parent.*
(g)(2) 1998 Annual Report of Parent.*
(g)(3) Unaudited Financial Report of Parent as of June 30, 1999.*
</TABLE>
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*Previously filed.
3
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SIGNATURE
After due inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: October 8, 1999
<TABLE>
<S> <C> <C>
GRUPO MEXICO, S.A. DE C.V.
By: /s/ DANIEL TELLECHEA SALIDO
------------------------------------------
Name: Daniel Tellechea Salido
Title: Managing Director for
Administration
and Finance
GRUPO MEXICO, S.A. DE C.V.
By: /s/ GENARO GUERRERO DIAZ MERCADO
------------------------------------------
Name: Genaro Guerrero Diaz Mercado
Title: Treasurer
ASMEX CORPORATION
By: /s/ DANIEL TELLECHEA SALIDO
------------------------------------------
Name: Daniel Tellechea Salido
Title: Vice President and Treasurer
</TABLE>
4
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO.
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<S> <C>
(a)(1) Offer to Purchase dated September 27, 1999.*
(a)(2) Form of Letter of Transmittal.*
(a)(3) Form of Notice of Guaranteed Delivery.*
(a)(4) Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees.*
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other
Nominees.*
(a)(6) Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.*
(a)(7) Form of Summary Advertisement dated September 27, 1999.*
(a)(8) Press release of Parent dated September 24, 1999.*
(a)(9) Press release of Parent dated September 27, 1999.*
(a)(10) Supplement to the Offer to Purchase dated October 7, 1999.
(a)(11) Press release of Parent dated October 7, 1999.
(b)(1) Commitment Letter from The Chase Manhattan Bank and Chase Securities Inc. dated September 24,
1999.*
(b)(2) First Amended and Restated Commitment Letter from The Chase Manhattan Bank and Chase Securities
Inc. dated October 5, 1999.
(b)(3) Second Amended and Restated Commitment Letter from The Chase Manhattan Bank and Chase Securities
Inc. dated October 7, 1999.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) None.
(g)(1) 1997 Annual Report of Parent.*
(g)(2) 1998 Annual Report of Parent.*
(g)(3) Unaudited Financial Report of Parent as of June 30, 1999.*
</TABLE>
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* Previously filed.
5
<PAGE>
Exhibit 99(a)(10)
SUPPLEMENT TO THE OFFER TO PURCHASE DATED OCTOBER 8, 1999
ASMEX CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
GRUPO MEXICO, S.A. DE C.V.
HAS INCREASED THE PRICE OF ITS
OFFER TO PURCHASE FOR CASH
ALL OF THE OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED JUNIOR PARTICIPATING PREFERRED STOCK PURCHASE RIGHTS)
OF
ASARCO INCORPORATED
TO
$29.50 NET PER SHARE
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON MONDAY, OCTOBER 25, 1999,
UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT
NUMBER OF SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED JUNIOR PARTICIPATING
PREFERRED STOCK PURCHASE RIGHTS (INCLUDING ANY SUCCESSORS THERETO, THE
"RIGHTS")), WITHOUT PAR VALUE (THE "COMMON STOCK"), OF ASARCO INCORPORATED
("ASARCO"), WHICH, TOGETHER WITH SHARES OF COMMON STOCK OWNED BY GRUPO MEXICO,
S.A. DE C.V. ("PARENT"), CONSTITUTE AT LEAST 80% OF THE SHARES OF COMMON STOCK
OUTSTANDING ON A FULLY DILUTED BASIS, (2) THE RIGHTS HAVING BEEN REDEEMED BY THE
BOARD OF DIRECTORS OF ASARCO OR ASMEX CORPORATION ("PURCHASER") BEING SATISFIED,
IN ITS SOLE DISCRETION, THAT THE RIGHTS ARE INVALID OR OTHERWISE INAPPLICABLE TO
THE TRANSACTIONS CONTEMPLATED BY THE OFFER TO PURCHASE OF PURCHASER, DATED
SEPTEMBER 27, 1999, AS SUPPLEMENTED HEREBY AND (3) THE PURCHASER BEING
SATISFIED, IN ITS SOLE DISCRETION, THAT THE AGREEMENT AND PLAN OF MERGER DATED
AS OF OCTOBER 5, 1999, AMONG ASARCO, PHELPS DODGE CORPORATION AND AAV
CORPORATION, HAS BEEN TERMINATED AND ASARCO HAVING ENTERED INTO A DEFINITIVE
MERGER AGREEMENT WITH PARENT AND PURCHASER TO PROVIDE FOR THE ACQUISITION OF
ASARCO BY PARENT OR PURCHASER.
---------------------
THE OFFER IS NOT CONDITIONED UPON PURCHASER OBTAINING FINANCING.
---------------------
IMPORTANT
PARENT INTENDS TO SEEK TO RESUME NEGOTIATIONS WITH ASARCO WITH RESPECT TO
THE ACQUISITION OF ASARCO BY PARENT OR PURCHASER. PURCHASER RESERVES THE RIGHT
TO AMEND THE OFFER UPON ENTERING INTO A MERGER AGREEMENT WITH ASARCO.
Any shareholder desiring to tender all or any portion of such shareholder's
shares of Common Stock should either (i) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, have such shareholder's signature thereon guaranteed if
required by Instruction 1 to the Letter of Transmittal, mail or deliver the
Letter of Transmittal (or such facsimile thereof) and any other required
documents to the Depositary and either deliver the certificates for such shares
of Common Stock and, if separate, the certificates representing the associated
Rights to the Depositary along with the Letter of Transmittal (or a facsimile
thereof) or deliver such shares of Common Stock (and, if applicable, Rights)
pursuant to the procedure for book-entry transfer set forth in Section 3 of the
Offer to Purchase prior to the expiration of the Offer or (ii) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such shareholder. A shareholder having shares of
Common Stock (and, if applicable, Rights) registered in the name of a broker,
dealer, commercial bank, trust company or other nominee must contact such
broker, dealer, commercial bank, trust company or other nominee if such
shareholder desires to tender such shares of Common Stock (and, if applicable,
Rights).
Any shareholder who desires to tender shares of Common Stock (and, if
applicable, Rights) and whose certificates for such shares (and, if applicable,
Rights) are not immediately available, or who cannot comply with the procedures
for book-entry transfer described in the Offer to Purchase on a timely basis,
may tender such shares of Common Stock (and, if applicable, Rights) by following
the procedures for guaranteed delivery set forth in Section 3 of the Offer to
Purchase.
Questions and requests for assistance may be directed to the Information
Agent (as defined herein) or the Dealer Manager (as defined herein) at their
respective addresses and telephone numbers set forth on the back cover of the
Offer to Purchase. Additional copies of the original Offer to Purchase, this
Supplement, the Letter of Transmittal or other tender offer materials may be
obtained from the Information Agent.
---------------------
THE DEALER MANAGER FOR THE OFFER IS:
CHASE SECURITIES INC.
October 8, 1999
<PAGE>
TABLE OF CONTENTS
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PAGE
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INTRODUCTION.................................................................................................... 1
1. Terms of the Offer; Expiration Date.................................................................. 7
2. Procedures for Tendering Common Shares............................................................... 7
3. Price Range of Shares; Dividends..................................................................... 8
4. Source and Amount of Funds........................................................................... 8
5. Background of the Offer; Contacts with the Company................................................... 8
6. Conditions of the Offer.............................................................................. 15
7. Certain Legal Matters; Regulatory Approvals; Certain Litigation...................................... 17
8. Miscellaneous........................................................................................ 17
</TABLE>
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TO THE HOLDERS OF COMMON STOCK OF ASARCO INCORPORATED:
INTRODUCTION
The following information amends and supplements the Offer to Purchase,
dated September 27, 1999 (the "Offer to Purchase"; capitalized terms not defined
herein having the meanings ascribed therein), of ASMEX Corporation
("Purchaser"), a Delaware corporation and a wholly owned subsidiary of Grupo
Mexico, S.A. de C.V., a Mexican corporation ("Parent"), pursuant to which
Purchaser is offering to purchase all of the outstanding shares of common stock,
without par value (the "Common Stock"), of ASARCO Incorporated, a New Jersey
corporation ("ASARCO"), including the associated Junior Participating Preferred
Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of January 28, 1998, as amended as of July 15, 1999, between ASARCO and
The Bank of New York, as Rights Agent (as such agreement may be further amended
and including any successor agreement, the "Rights Agreement"), at a price of
$29.50 per share of Common Stock, net to the seller in cash, without interest
thereon (the "Offer Price"), upon the terms and subject to the conditions set
forth in the Offer to Purchase, this Supplement and in the Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"). Unless
the context otherwise requires, all references to Common Stock shall include the
associated Rights, and all references to the Rights shall include the benefits
that may inure to holders of the Rights pursuant to the Rights Agreement,
including the right to receive any payment due upon redemption of the Rights.
The purpose of the Offer and the Proposed Merger is to enable Parent to
acquire control of, and ultimately the entire equity interest in, ASARCO. The
Offer, as the first step in the acquisition of ASARCO, is intended to facilitate
the acquisition of that number of shares of Common Stock that, together with
shares of Common Stock owned by Parent and Purchaser, would constitute at least
80% of the shares of Common Stock on a fully diluted basis. Article 7 of
ASARCO'S Restated Certificate of Incorporation (the "ASARCO Certificate of
Incorporation") appears to require the affirmative vote of at least 80% of the
outstanding shares of Common Stock to approve a transaction such as the Proposed
Merger. Parent intends to seek to resume negotiations with ASARCO with respect
to the acquisition of ASARCO by Parent or Purchaser in order to enter into a
definitive merger agreement providing for such acquisition. Parent currently
intends, as soon as practicable following consummation of the Offer pursuant to
such a merger agreement or, if practicable, prior to the scheduled Expiration
Date of the Offer, to seek to have Purchaser consummate a merger with and into
ASARCO, with ASARCO continuing as the surviving corporation (the "Proposed
Merger"), pursuant to which each then outstanding share of Common Stock (other
than shares of Common Stock owned by Parent or any of its wholly owned
subsidiaries and shares of Common Stock held in the treasury of ASARCO) would be
converted into the right to receive in cash the price per share paid by
Purchaser pursuant to the Offer. In general, in the event that the Proposed
Merger is consummated as described above, gain or loss will be recognized by a
shareholder of ASARCO who receives cash in exchange for shares of Common Stock
pursuant to the Offer and/or the Proposed Merger. See Section 5 of the Offer to
Purchase.
This Supplement should be read in conjunction with the Offer to Purchase.
Except as set forth in this Supplement, the terms and conditions previously set
forth in the Offer to Purchase, and the Letter of Transmittal mailed with the
Offer to Purchase, remain applicable in all respects to the Offer. Terms used
but not defined herein have the meanings set forth in the Offer to Purchase.
On Monday, September 27, 1999, ASARCO filed an amendment to the ASARCO
Schedule 14D-9 with respect to the Phelps Dodge Exchange Offer announcing
certain changes that the ASARCO Board had adopted to its compensation and stock
option plans.
On Wednesday, September 29, 1999, Parent's legal and financial advisors met
with ASARCO's legal and financial advisors to discuss ASARCO's intended
procedures going forward in light of the Offer, the competing Phelps Dodge
Exchange Offer for the Common Stock and the Proposed Cyprus Amax Transaction.
1
<PAGE>
On Thursday, September 30, 1999, Cyprus Amax notified ASARCO that it was
terminating the Cyprus Amax Agreement and paid ASARCO a $45 million termination
fee. Phelps Dodge and Cyprus Amax then issued a press release publicly
announcing that they had signed a definitive merger agreement under which Phelps
Dodge will acquire Cyprus Amax for $7.61 in cash and 0.2203 shares of Phelps
Dodge Common Stock per Cyprus Amax share on a fully prorated basis.
Also on September 30, the ASARCO Board determined to postpone the occurrence
of a Distribution Date for purposes of the Rights Agreement as a result of the
public announcement of the Offer until such later date as determined by the
ASARCO Board. On the evening of September 30, Parent was provided by ASARCO's
legal advisors with a form of merger agreement acceptable to ASARCO.
On Friday evening, October 1, 1999, Mr. McAllister and Mr. Larrea met in
Mexico City and discussed the Offer. During that conversation, Mr. Larrea
proposed that ASARCO enter into a merger agreement with Parent and Purchaser at
$26.00 per share. Mr. McAllister said that he did not believe the ASARCO Board
would be prepared to take such action at that time.
On Saturday, October 2, 1999, Parent's legal advisors delivered to ASARCO
Parent's proposed revisions to the form of merger agreement that ASARCO had
previously delivered. On Sunday, October 3, 1999, the legal advisors to Parent
and ASARCO met to discuss the terms of a proposed merger agreement. A revised
form of merger agreement was delivered by ASARCO to Parent's legal advisors late
on Sunday, October 3, 1999.
On Monday, October 4, 1999, ASARCO's financial advisors telephonically
informed Parent's financial advisor that ASARCO would be conducting an "auction"
for the sale of ASARCO. Later that day, Mr. Larrea sent a letter to Mr.
McAllister to express his dissatisfaction with the process established to
determine ASARCO's proposed ultimate acquiror. Still later on October 5, 1999,
ASARCO delivered written procedures governing the "auction."
On Tuesday, October 5, 1999, ASARCO filed a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer, recommending that
shareholders of ASARCO reject the Offer and not tender their shares pursuant
thereto. That evening, representatives of Parent's legal and financial advisors
submitted a bid package to ASARCO pursuant to its established procedures, the
material terms of which were set forth in the following cover letter:
October 5, 1999
BY HAND
Board of Directors of ASARCO Incorporated
c/o J. Michael Schell, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Ladies and Gentlemen:
In accordance with the procedures communicated to us by the ASARCO
Board, we are pleased to submit the proposal of Grupo Mexico, S.A. de
C.V., through its wholly-owned subsidiary, ASMEX Corporation, which will
be irrevocable until 10:00 a.m. Thursday, October 7, 1999, to acquire all
of the outstanding common stock of ASARCO at a price of $26.00 per share
(the "Proposal"). We are prepared to enter into the form of merger
agreement previously submitted to us by ASARCO's attorneys on October 3,
1999 with those revisions that are reflected in the enclosed mark-up of
that agreement (as so revised, the "Proposed Agreement"). The price
stated in our Proposal reflects our previously expressed disagreement
with the "auction" procedures that you have employed.
2
<PAGE>
Our Proposal is fully financed as evidenced by the enclosed
commitment letter from The Chase Manhattan Bank and Chase Securities
Inc., which has been amended and restated today in order to narrow
certain conditions originally reflected therein. Under the terms of the
amended commitment letter, the narrowed conditions will not, however,
become effective if we have not signed a merger agreement by 5:00 p.m. on
October 8, 1999. Our Proposal contemplates the dual-track structure
discussed by our respective counsel of proceeding with a tender offer and
a call for a shareholders meeting. As a result of the negotiations with
our lender to obtain these more limited conditions, the tender offer
would close twenty business days from the date of its amendment. The
total amount of the funds required to effect the transaction will be
provided by our working capital resources plus the amounts to be supplied
under the commitment letter. Our Proposal is fully authorized and no
further corporate action by Grupo Mexico is required.
The Proposed Agreement is subject to the following material
conditions:
(i) the conditions set forth in Article VI of the Proposed Agreement;
and
(ii) a condition with respect to disruption of the financial markets
that reflects the language of the corresponding condition in our
commitment letter, which is significantly narrower for the period
prior to November 30, 1999 than was the case under our commitment
letter prior to its amendment.
The Proposed Agreement also provides for a termination fee in the
amount of $30 million in the following circumstances:
(i) If ASARCO breaches the "No Shop" provision of Section 5.7 of the
Proposed Agreement;
(ii) If ASARCO enters into an alternative transaction with a third party
in accordance with the "fiduciary out" and "match" right provisions
of Section 5.7 of the Proposed Agreement;
(iii) If ASARCO withdraws or adversely modifies its recommendation to its
shareholders of the transactions contemplated by the Proposed
Agreement; and
(iv) If the ASARCO shareholders do not approve the transactions
contemplated by the Proposed Agreement at ASARCO's shareholder
meeting and at such time there is a pending competing acquisition
proposal that has been announced.
In addition, we have been advised by the relevant regulatory
authorities that the only barrier to our receipt of notice of early
termination under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 is the required filing by ASARCO of its report form. Should we
receive early termination prior to execution of the Proposed Agreement,
we would be willing to conform Section 5.4 to the version of Section 5.4
contained in the September 30, 1999 draft of the merger agreement
submitted to us by your attorneys.
In the event you choose to proceed with our Proposal, we will require
a period of exclusivity for the limited period of time that would be
necessary to clarify any outstanding matters and arrive at a
comprehensive agreement.
3
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We look forward to receiving a prompt and favorable response to this
Proposal so that we can proceed to finalize this transaction.
Notwithstanding your adopted procedures, which we received today, we hope
that you will leave the auction process open if you do not choose to
accept this Proposal.
Very truly yours,
<TABLE>
<S> <C>
Grupo Mexico, S.A. de C.V.
/s/ DANIEL TELLECHEA SALIDO
-----------------------------------
Daniel Tellechea Salido
Managing Director for Administration
and Finance and Alternate Director
/s/ GENARO GUERRERO DIAZ MERCADO
-----------------------------------
Genaro Guerrero Diaz Mercado
Treasurer
</TABLE>
On Wednesday, October 6, 1999, ASARCO and Phelps Dodge issued a press
release publicly announcing that they had entered into a merger agreement
providing for an increase in the terms of the revised Phelps Dodge Exchange
Offer for ASARCO Common Stock (the "PD Merger Agreement"). According to a Form
8-K filed by ASARCO on the same day, the PD Merger Agreement provides an
all-cash election for ASARCO shareholders of $29.50 per share of Common Stock
and an all-stock election of 0.50266 shares of Phelps Dodge Common Stock per
share of Common Stock, subject to proration. However, assuming full proration,
the PD Merger Agreement provides for an exchange of $14.75 in cash and 0.2513
shares of Phelps Dodge Common Stock for each share of Common Stock on a fully
prorated basis.
In the PD Merger Agreement, ASARCO has agreed to a provision (the "No
Solicitation Provision") that none of ASARCO, its subsidiaries or any of their
respective directors, officers, employees, investment bankers, financial
advisors, attorneys, accountants or other representatives will, directly or
indirectly through another person, (i) solicit, initiate or encourage (including
by way of furnishing information), or take any other action designed to
facilitate, any inquiries or the making of any proposal which constitutes an
ASARCO Takeover Proposal (as defined herein) or reasonably could be expected to
lead to an ASARCO Takeover Proposal, or (ii) participate in any discussions or
negotiations regarding any ASARCO Takeover Proposal; provided, however, that if
the ASARCO Board determines in good faith, after consultation with outside
counsel, that it is necessary to do so in order to comply with its fiduciary
duties to ASARCO's shareholders under applicable law, ASARCO may, in response to
an ASARCO Takeover Proposal which was not solicited by it or which did not
otherwise result from a breach of the No Solicitation Provision, and subject to
providing prior written notice of its decision to take such action to Phelps
Dodge (the "ASARCO Notice"), (x) furnish information with respect to ASARCO and
its subsidiaries to any person making an ASARCO Takeover Proposal pursuant to a
customary confidentiality agreement (as determined by ASARCO after consultation
with its outside counsel) and (y) participate in discussions or negotiations
regarding such ASARCO Takeover Proposal. The No Solicitation Provision further
provides that neither the ASARCO Board nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Phelps Dodge, the recommendation by such board of directors or such
committee of the proposed merger with Phelps Dodge (the "Proposed PD Merger") or
the PD Merger Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any ASARCO Takeover Proposal, or (iii) cause ASARCO to
enter into any letter of intent, agreement in principle, acquisition agreement
or other similar agreement (each, an "ASARCO Acquisition Agreement") related to
any ASARCO Takeover Proposal. Notwithstanding the foregoing, in the event that
4
<PAGE>
the ASARCO Board receives an ASARCO Takeover Proposal and the ASARCO Board
determines in good faith, after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary duties to ASARCO's
shareholders under applicable law, the ASARCO Board may (x) take any of the
actions described in clauses (i), (ii) or (iii) of the preceding sentence or (y)
terminate the PD Merger Agreement (and concurrently with or after such
termination, if it so chooses, cause ASARCO to enter into any ASARCO Acquisition
Agreement with respect to any ASARCO Takeover Proposal) but only after the fifth
business day following Phelps Dodge's receipt of written notice advising Phelps
Dodge that the ASARCO Board is prepared to accept an ASARCO Takeover Proposal,
specifying the material terms and conditions of such ASARCO Takeover Proposal
and identifying the person making such ASARCO Takeover Proposal.
As used in the PD Merger Agreement, the term "ASARCO Takeover Proposal"
means any inquiry, proposal or offer (or any improvement, restatement,
amendment, renewal or reiteration thereof) from any person relating to any
direct or indirect acquisition or purchase of a business or shares of any class
of equity securities of ASARCO or any of its subsidiaries, any tender offer or
exchange offer that, if consummated, would result in any person beneficially
owning any class of equity securities of ASARCO or any of its subsidiaries, or
any merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving ASARCO or any of its subsidiaries,
other than the Proposed PD Merger (provided that an ASARCO Takeover Proposal
will have to exceed certain financial or ownership thresholds in order to
require payment of the ASARCO Termination Fee).
The PD Merger Agreement also provides that ASARCO shall be liable to Phelps
Dodge for a termination fee of $30 million payable by wire transfer of same day
funds (the "ASARCO Termination Fee") if (i) prior to the meeting of ASARCO
shareholders to consider and vote upon the Proposed PD Merger an ASARCO Takeover
Proposal shall have been made known to ASARCO or shall have been made directly
to its shareholders generally or any person shall have publicly announced an
intention (whether or not conditional) to make an ASARCO Takeover Proposal and
thereafter the PD Merger Agreement is terminated by either Phelps Dodge or
ASARCO in the event shares are not purchased pursuant to the Phelps Dodge
Exchange Offer for the Common Stock on or before March 31, 2000 or (ii) the PD
Merger Agreement is terminated by ASARCO in order to enter into an agreement to
accept an ASARCO Takeover Proposal; provided, however, that no ASARCO
Termination Fee shall be payable to Phelps Dodge unless and until within 18
months of such termination ASARCO or any of its subsidiaries enters into any
ASARCO Acquisition Agreement or consummates any ASARCO Takeover Proposal.
Also on October 6, 1999, Parent and Purchaser received notice that they had
been granted early termination of the waiting period under the HSR Act. Later in
the evening of October 6, 1999, Mr. Larrea corresponded to Mr. McAllister to
register again his displeasure with the process employed by ASARCO in its
"auction."
On October 7, 1999, Parent submitted to the ASARCO Board a letter detailing
the revised proposal to acquire ASARCO by Parent and Purchaser at the increased
Offer Price of $29.50 per share in cash. Subsequently, Parent issued the
following press release disclosing the delivery and contents of the letter:
GRUPO MEXICO INCREASES TENDER OFFER
TO ACQUIRE ASARCO INC.
TO $29.50 PER SHARE IN CASH
Receives Early Termination to Hart-Scott-Rodino Waiting Period
Mexico City (October 7, 1999)--Grupo Mexico, S.A. de C.V., announced
today that it has revised its proposal to acquire all of the outstanding
shares of ASARCO Incorporated (NYSE:AR) to increase the price to $29.50
per share in cash. The revised offer, which values ASARCO at $2.24
billion (including assumption of debt), is scheduled to expire at 12:00
midnight, New York City time, on Monday, October 25, 1999, unless
extended.
5
<PAGE>
Following the completion of the tender offer, Grupo Mexico intends to
consumate a second step merger in which all remaining ASARCO shareholders
will also receive the same cash price paid in the tender offer.
Earlier today, Grupo Mexico sent the following letter to the Board of
Directors of ASARCO:
October 7, 1999
Board of Directors
ASARCO Incorporated
180 Maiden Lane
New York, NY 10038
Attention: Francis R. McAllister
Chairman and Chief Executive Officer
Dear Members of the Board:
Based on our assessment of the pending offer by Phelps Dodge
Corporation as reflected in your announced agreement with them, and our
view of the intrinsic value in ASARCO Incorporated that Grupo Mexico, S.A.
de C.V., could realize if Grupo Mexico owned ASARCO, we are today
increasing the price in our September 27 tender offer to ASARCO
shareholders for all outstanding shares of ASARCO to $29.50 per share in
cash. The other terms of our September 27 tender offer remain
substantially unchanged.
Our revised offer provides value to your shareholders that is
demonstrably superior to your agreement with Phelps Dodge. This offer
represents a premium of 59% over the value of your recently announced
agreement with Phelps Dodge based upon the October 6, 1999 closing price
of $53.00 per share for Phelps Dodge common stock, and a premium of 59%
over ASARCO's unaffected stock price on August 20, 1999, immediately prior
to the announcement of Phelps Dodge's proposal.
As a result, we believe that you can, and indeed are obligated to,
meet with us and discuss our revised offer. Accordingly, we request that,
pursuant to Section 5.9 of your agreement with Phelps Dodge, you elicit
such advice and make such determinations in view of your fiduciary duties
such that ASARCO would be in a position to immediately engage in
negotiations and discussions with us concerning our superior proposal. We
also believe that you cannot, consistent with your fiduciary duties,
continue to recommend to your shareholders the transaction with Phelps
Dodge in light of our revised offer.
As before, our execution of a merger agreement would not be contingent
upon a due dilgence review. Furthermore, in view of the fact that we have
been granted "early termination" of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act, we are confident that
consummation of our proposed transaction is not subject to any material
regulatory approvals.
Our revised offer presents a compelling opportunity for ASARCO and its
shareholders to improve upon your existing transaction with Phelps Dodge.
Our offer, of course, continues to be conditioned upon entering into a
negotiated agreement with you. As in the past, we are prepared to meet
with you at any time to negotiate the terms of a merger agreement having
substantially the same terms and conditions that were contained in the
form of merger agreement that was submitted to you on October 5, 1999,
modified to (i) remove our request for the "match" right in connection
with competing proposals set forth in the "no-shop" provision and
replacing it with the relevant provision in your Phelps Dodge Agreement,
(ii) reflect the termination of your agreement with Phelps Dodge and (iii)
incorporate certain provisions from your agreement with Phelps Dodge,
provided that you enter into an agreement with us on or before October 15,
1999.
6
<PAGE>
Please contact us to schedule a meeting of our respective advisors to
bring this situation to a prompt and satisfactory conclusion for the
shareholders of both of our companies.
<TABLE>
<S> <C> <C>
Very truly yours,
GRUPO MEXICO, S.A. de C.V.
By /s/ DANIEL TELLECHEA SALIDO
---------------------------
Daniel Tellechea Salido
Managing Director for Administrative
and Finance and Alternative Director
By /s/ GENARO GUERRERO DIAZ MERCADO
-----------------------------------
Genaro Guerrero Diaz Mercado
Treasurer
</TABLE>
cc:J. Michael Schell, Esq.
Steven Koch
Grupo Mexico is a diversified mining company that ranks among the world's
largest copper, zinc and silver producers. The company's business includes
mining, smelting and refining in Mexico and is one of the world's
lowest-cost operations. Grupo Mexico also operates the largest railroad
system in Mexico.
NOTE: Statements in this press release include "forward-looking
statements" that express expectations of future events or results. All
statements based on future expectations rather than on historical facts
are forward-looking statements that involve a number of risks and
uncertainties, and the company cannot give assurance that such statements
will prove to be correct.
Parent intends to seek to resume negotiations with ASARCO with respect to
the acquisition of ASARCO by Parent or Purchaser, whether pursuant to the Offer
and the Proposed Merger, or otherwise. If such negotiations result in a
definitive merger agreement between ASARCO, Parent and Purchaser, the
consideration to be received by holders of shares of Common Stock would consist
of the right to receive an amount in cash equal to the Offer Price.
This Supplement does not constitute a solicitation of proxies for any
meeting of ASARCO's shareholders. Any such solicitation by Parent or Purchaser
would be made only pursuant to separate proxy materials complying with the
requirements of the Exchange Act.
THE OFFER TO PURCHASE, THIS SUPPLEMENT AND THE LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE. The discussion set forth in Section
1 of the Offer to Purchase is hereby amended and supplemented as follows:
The price to be paid for Common Stock purchased pursuant to the Offer has
been increased from $26.00 to $29.50 per share of Common Stock, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions of the Offer. All shareholders whose shares of Common Stock are
tendered and purchased pursuant to the Offer (including those shares of Common
Stock tendered prior to the date hereof) will receive the increased purchase
price.
2. PROCEDURES FOR TENDERING COMMON SHARES. The discussion set forth in
Section 3 of the Offer to Purchase is hereby amended and supplemented as
follows:
Tendering shareholders may continue to use the Letter of Transmittal and
Notice of Guaranteed Delivery previously distributed with the Offer to Purchase
to tender Common Stock. Shareholders should follow the procedures for tendering
Common Stock set forth in Section 3 of the Offer to Purchase.
7
<PAGE>
SHAREHOLDERS WHO HAVE PREVIOUSLY VALIDLY TENDERED SHARES OF COMMON STOCK
PURSUANT TO THE OFFER AND NOT PROPERLY WITHDRAWN SUCH SHARES OF COMMON STOCK
HAVE VALIDLY TENDERED SUCH SHARES OF COMMON STOCK FOR PURPOSES OF THE OFFER, AS
AMENDED, AND NEED NOT TAKE ANY FURTHER ACTION IN ORDER TO RECEIVE THE INCREASED
PRICE OF $29.50 PER SHARE OF COMMON STOCK PURSUANT TO THE OFFER.
3. PRICE RANGE OF SHARES; DIVIDENDS. The discussion set forth in Section 6
of the Offer to Purchase is hereby amended and supplemented as follows:
According to public sources, the high and low sale prices of Common Stock as
reported by the NYSE Composite Tape for the third quarter of 1999 were $27 9/16
and $17 1/16, respectively; the high and low sale prices per share of Common
Stock for the fourth quarter of 1999 (through October 6, 1999) were $28 1/8 and
$26 9/16, respectively. On October 6, 1999, the last full trading day prior to
Parent's announcement that it was amending the terms of the Offer upon the terms
set forth in this Supplement, the reported closing sale price per share of
Common Stock as reported by the NYSE Composite Tape was $28. Shareholders are
urged to obtain a current market quotation for the Common Stock.
4. SOURCE AND AMOUNT OF FUNDS. The discussion set forth in Section 10 of
the Offer to Purchase is hereby amended and supplemented as follows:
Purchaser estimates that the total amount of funds now required to purchase
Common Stock pursuant to the Offer (as described in this Supplement) and to pay
all related costs and expenses will be approximately $1,150 million.
On October 5, 1999, the commitment letter, dated as of September 24, 1999
(the "Commitment Letter"), by and among Parent, The Chase Manhattan Bank and
Chase Securities Inc. (collectively, "Chase") was amended (the "First Amended
and Restated Commitment Letter") to modify certain conditions to the obligations
of Chase under the Credit Facilities in a manner favorable to Parent and to
provide a revised condition with respect to market disruptions that is more
narrow than the prior such condition until November 30, 1999, and that reverts
to its prior form thereafter. Such amendments to the commitment letter were
subject to a satisfactory merger agreement being entered into with ASARCO not
later than October 8, 1999.
On October 7, 1999, the Commitment Letter was further amended (the "Second
Amended and Restated Committment Letter") to extend to October 15, 1999 the date
by which a merger agreement with ASARCO must be entered into, and to require
that any additional funds necessary to consummate the Offer as a result of the
increase in the price to be paid for Common Stock purchased in the Offer be
contributed as equity to the Purchaser from sources acceptable to Chase
Securities Inc.
The foregoing supplemental description of the Credit Facilities is qualified
in its entirety by reference to the full text of the Commitment Letter, the
First Amended and Restated Commitment Letter and the Second Amended and Restated
Commitment Letter, copies of which have been filed with the SEC as exhibits to
the Parent Schedule 14D-1 and are incorporated by reference herein.
5. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. The discussion set
forth in Section 11 of the Offer to Purchase is hereby amended and supplemented
as follows:
On Monday, September 27, 1999, ASARCO filed an amended ASARCO Schedule 14D-9
with respect to the Phelps Dodge Exchange Offer announcing certain changes that
the ASARCO Board had adopted to its compensation and stock option plans.
On Wednesday, September 29, 1999, Parent's legal and financial advisors met
with ASARCO's legal and financial advisors to discuss ASARCO's intended
procedures going forward in light of the Offer, the competing Phelps Dodge
Exchange Offer for the Common Stock and the Proposed Cyprus Amax Transaction.
On Thursday, September 30, 1999, Cyprus Amax notified ASARCO that it was
terminating the Cyprus Amax Agreement and paid ASARCO a $45 million termination
fee. Phelps Dodge and Cyprus Amax then issued a press release publicly
announcing that they had signed a definitive merger agreement under which
8
<PAGE>
Phelps Dodge will acquire Cyprus Amax for $7.61 in cash and 0.2203 shares of
Phelps Dodge Common Stock per Cyprus Amax share on a fully prorated basis.
Also on September 30, the ASARCO Board determined to postpone the occurrence
of a Distribution Date for purposes of the Rights Agreement as a result of the
public announcement of the Offer until such later date as determined by the
ASARCO Board. On the evening of September 30, Parent was provided by ASARCO's
legal advisors with a form of merger agreement acceptable to ASARCO.
On Friday evening, October 1, 1999, Mr. McAllister and Mr. Larrea met in
Mexico City and discussed the Offer. During that conversation, Mr. Larrea
proposed that ASARCO enter into a merger agreement with Parent and Purchaser at
$26.00 per share. Mr. McAllister said that he did not believe the ASARCO Board
would be prepared to take such action at that time.
On Saturday, October 2, 1999, Parent's legal advisors delivered to ASARCO
Parent's proposed revisions to the form of merger agreement that ASARCO had
previously delivered. On Sunday, October 3, 1999, the legal advisors to Parent
and ASARCO met to discuss the terms of a proposed merger agreement. A revised
form of merger agreement was delivered by ASARCO to Parent's legal advisors late
on Sunday, October 3, 1999.
Also, on Monday, October 4, 1999, ASARCO's financial advisors telephonically
informed Parent's financial advisor that ASARCO would be conducting an "auction"
for the sale of ASARCO. Later that day, Mr. Larrea sent a letter to Mr.
McAllister to express his dissatisfaction with the process established to
determine ASARCO's proposed ultimate acquiror. Still later on October 5, 1999,
ASARCO delivered written procedures governing the "auction."
On Tuesday, October 5, 1999, ASARCO filed a Solicitation/Recommendation
Statement on Schedule 14D-9 with respect to the Offer, recommending that
shareholders of ASARCO reject the Offer and not tender their shares pursuant
thereto. That evening, representatives of Parent's legal and financial advisors
submitted a bid package to ASARCO pursuant to its established procedures, the
material terms of which were set forth in the following cover letter:
October 5, 1999
BY HAND
Board of Directors of ASARCO Incorporated
c/o J. Michael Schell, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, NY 10022
Ladies and Gentlemen:
In accordance with the procedures communicated to us by the ASARCO
Board, we are pleased to submit the proposal of Grupo Mexico, S.A. de
C.V., through its wholly-owned subsidiary, ASMEX Corporation, which will
be irrevocable until 10:00 a.m. Thursday, October 7, 1999, to acquire all
of the outstanding common stock of ASARCO at a price of $26.00 per share
(the "Proposal"). We are prepared to enter into the form of merger
agreement previously submitted to us by ASARCO's attorneys on October 3,
1999 with those revisions that are reflected in the enclosed mark-up of
that agreement (as so revised, the "Proposed Agreement"). The price
stated in our Proposal reflects our previously expressed disagreement
with the "auction" procedures that you have employed.
9
<PAGE>
Our Proposal is fully financed as evidenced by the enclosed
commitment letter from The Chase Manhattan Bank and Chase Securities
Inc., which has been amended and restated today in order to narrow
certain conditions originally reflected therein. Under the terms of the
amended commitment letter, the narrowed conditions will not, however,
become effective if we have not signed a merger agreement by 5:00 p.m. on
October 8, 1999. Our Proposal contemplates the dual-track structure
discussed by our respective counsel of proceeding with a tender offer and
a call for a shareholders meeting. As a result of the negotiations with
our lender to obtain these more limited conditions, the tender offer
would close twenty business days from the date of its amendment. The
total amount of the funds required to effect the transaction will be
provided by our working capital resources plus the amounts to be supplied
under the commitment letter. Our Proposal is fully authorized and no
further corporate action by Grupo Mexico is required.
The Proposed Agreement is subject to the following material
conditions:
(i) the conditions set forth in Article VI of the Proposed
Agreement; and
(ii) a condition with respect to disruption of the financial markets
that reflects the language of the corresponding condition in
our commitment letter, which is significantly narrower for the
period prior to November 30, 1999 than was the case under our
commitment letter prior to its amendment.
The Proposed Agreement also provides for a termination fee in the
amount of $30 million in the following circumstances:
(i) If ASARCO breaches the "No Shop" provision of Section 5.7 of the
Proposed Agreement;
(ii) If ASARCO enters into an alternative transaction with a third
party in accordance with the "fiduciary out" and "match" right
provisions of Section 5.7 of the Proposed Agreement;
(iii) If ASARCO withdraws or adversely modifies its recommendation to
its shareholders of the transactions contemplated by the
Proposed Agreement; and
(iv) If the ASARCO shareholders do not approve the transactions
contemplated by the Proposed Agreement at ASARCO's shareholder
meeting and at such time there is a pending competing
acquisition proposal that has been announced.
In addition, we have been advised by the relevant regulatory
authorities that the only barrier to our receipt of notice of early
termination under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 is the required filing by ASARCO of its report form. Should we
receive early termination prior to execution of the Proposed Agreement,
we would be willing to conform Section 5.4 to the version of Section 5.4
contained in the September 30, 1999 draft of the merger agreement
submitted to us by your attorneys.
In the event you choose to proceed with our Proposal, we will require
a period of exclusivity for the limited period of time that would be
necessary to clarify any outstanding matters and arrive at a
comprehensive agreement.
10
<PAGE>
We look forward to receiving a prompt and favorable response to this
Proposal so that we can proceed to finalize this transaction.
Notwithstanding your adopted procedures, which we received today, we hope
that you will leave the auction process open if you do not choose to
accept this Proposal.
Very truly yours,
Grupo Mexico, S.A. de C.V.
By: /S/ DANIEL TELLECHEA SALIDO
-------------------------------------------------------------------------
Daniel Tellechea Salido
Managing Director for Administration
and Finance and Alternate Director
By: /S/ GENARO GUERRERO DIAZ MERCADO
-------------------------------------------------------------------------
Genaro Guerrero Diaz Mercado
Treasurer
On Wednesday, October 6, 1999, ASARCO and Phelps Dodge issued a press
release publicly announcing that they had entered into the PD Merger Agreement
providing for an increase in the terms of the revised Phelps Dodge Exchange
Offer for ASARCO Common Stock. According to a Form 8-K filed by ASARCO on the
same day, the PD Merger Agreement provides an all-cash election for ASARCO
shareholders of $29.50 per share of Common Stock and an all-stock election of
0.50266 shares of Phelps Dodge Common Stock per share of Common Stock, subject
to proration. However, assuming full proration, the PD Merger Agreement provides
for an exchange of $14.75 in cash and 0.2513 shares of Phelps Dodge Common Stock
for each share of Common Stock on a fully prorated basis.
In the PD Merger Agreement, ASARCO has agreed to the No Solicitation
Provision pursuant to which none of ASARCO, its subsidiaries or any of their
respective directors, officers, employees, investment bankers, financial
advisors, attorneys, accountants or other representatives will, directly or
indirectly through another person, (i) solicit, initiate or encourage (including
by way of furnishing information), or take any other action designed to
facilitate, any inquiries or the making of any proposal which constitutes an
ASARCO Takeover Proposal or reasonably could be expected to lead to an ASARCO
Takeover Proposal, or (ii) participate in any discussions or negotiations
regarding any ASARCO Takeover Proposal; provided, however, that if the ASARCO
Board determines in good faith, after consultation with outside counsel, that it
is necessary to do so in order to comply with its fiduciary duties to ASARCO's
shareholders under applicable law, ASARCO may, in response to an ASARCO Takeover
Proposal which was not
11
<PAGE>
solicited by it or which did not otherwise result from a breach of the No
Solicitation Provision, and subject to providing the ASARCO Notice (x) furnish
information with respect to ASARCO and its subsidiaries to any person making an
ASARCO Takeover Proposal pursuant to a customary confidentiality agreement (as
determined by ASARCO after consultation with its outside counsel) and (y)
participate in discussions or negotiations regarding such ASARCO Takeover
Proposal. The No Solicitation Provision further provides that neither the ASARCO
Board nor any committee thereof shall (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Phelps Dodge, the
recommendation by such Board of Directors of such committee of the Proposed PD
Merger or the PD Merger Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any ASARCO Takeover Proposal, or (iii) cause
ASARCO to enter into an ASARCO Acquisition Agreement. Notwithstanding the
foregoing, in the event that the ASARCO Board receives an ASARCO Takeover
Proposal and the ASARCO Board determines in good faith, after consultation with
outside counsel, that it is necessary to do so in order to comply with its
fiduciary duties to ASARCO's shareholders under applicable law, the ASARCO Board
may (x) take any of the actions described in clauses (i), (ii) or (iii) of the
preceding sentence or (y) terminate the PD Merger Agreement (and concurrently
with or after such termination, if it so chooses, cause ASARCO to enter into any
ASARCO Acquisition Agreement with respect to any ASARCO Takeover Proposal) but
only after the fifth business day following Phelps Dodge's receipt of written
notice advising Phelps Dodge that the ASARCO Board is prepared to accept an
ASARCO Takeover Proposal, specifying the material terms and conditions of such
ASARCO Takeover Proposal and identifying the person making such ASARCO Takeover
Proposal.
The PD Merger Agreement also provides that ASARCO shall be liable to Phelps
Dodge for the ASARCO Termination Fee payable by wire transfer of same day funds
if (i) prior to the meeting of ASARCO shareholders to consider and vote upon the
Proposed PD Merger an ASARCO Takeover Proposal shall have been made known to
ASARCO or shall have been made directly to its shareholders generally or any
person shall have publicly announced an intention (whether or not conditional)
to make an ASARCO Takeover Proposal and thereafter the PD Merger Agreement is
terminated by either Phelps Dodge or ASARCO in the event shares of Common Stock
are not purchased pursuant to the Phelps Dodge Exchange Offer for the Common
Stock on or before March 31, 2000 or (ii) the PD Merger Agreement is terminated
by ASARCO in order to enter into an agreement to accept an ASARCO Takeover
Proposal; provided, however, that no ASARCO Termination Fee shall be payable to
Phelps Dodge unless and until within 18 months of such termination ASARCO or any
of its subsidiaries enters into any ASARCO Acquisition Agreement or consummates
any ASARCO Takeover Proposal.
Also on October 6, 1999, Parent and Purchaser received notice that they had
been granted early termination of the waiting period under the HSR Act. Later in
the evening of October 6, 1999, Mr. Larrea corresponded to Mr. McAllister to
register again his displeasure with the process employed by ASARCO in its
"auction."
On October 7, 1999, Parent submitted to the ASARCO Board a letter detailing
the revised proposal to acquire ASARCO by Parent and Purchaser at the increased
Offer Price of $29.50 per share in cash. Subsequently, Parent issued the
following press release disclosing the delivery and contents of the letter:
GRUPO MEXICO INCREASES TENDER OFFER
TO ACQUIRE ASARCO INC.
TO $29.50 PER SHARE IN CASH
RECEIVES EARLY TERMINATION TO HART-SCOTT-RODINO WAITING PERIOD
MEXICO CITY (OCTOBER 7, 1999)--Grupo Mexico, S.A. de C.V., announced
today that it has revised its proposal to acquire all of the outstanding
shares of ASARCO Incorporated (NYSE:AR) to increase the price to $29.50
per share in cash. The revised offer, which values
12
<PAGE>
ASARCO at $2.24 billion (including assumption of debt) is scheduled to
expire at 12:00 midnight, New York City time, on Monday, October 25, 1999,
unless extended.
Following the completion of the tender offer, Grupo Mexico intends to
consummate a second step merger in which all remaining ASARCO shareholders
will also receive the same cash price paid in the tender offer.
Earlier today, Grupo Mexico sent the following letter to the Board of
Directors of ASARCO:
October 7, 1999
Board of Directors
ASARCO Incorporated
180 Maiden Lane
New York, NY 10038
Attention: Francis R. McAllister
Chairman and Chief Executive Officer
Dear Members of the Board:
Based on our assessment of the pending offer by Phelps Dodge
Corporation as reflected in your announced agreement with them, and our
view of the intrinsic value in ASARCO Incorporated that Grupo Mexico, S.A.
de C.V., could realize if Grupo Mexico owned ASARCO, we are today
increasing the price in our September 27 tender offer to ASARCO
shareholders for all outstanding shares of ASARCO to $29.50 per share in
cash. The other terms of our September 27 tender offer remain
substantially unchanged.
Our revised offer provides value to your shareholders that is
demonstrably superior to your agreement with Phelps Dodge. This offer
represents a premium of 5% over the value of your recently announced
agreement with Phelps Dodge based upon the October 6, 1999 closing price
of $53.00 per share for Phelps Dodge common stock, and a premium of 59%
over ASARCO's unaffected stock price on August 20, 1999, immediately prior
to the announcement of Phelps Dodge's proposal.
As a result, we believe that you can, and indeed are obligated to,
meet with us and discuss our revised offer. Accordingly, we request that,
pursuant to Section 5.9 of your agreement with Phelps Dodge, you elicit
such advice and make such determinations in view of your fiduciary duties
so that ASARCO would be in a position to immediately engage in
negotiations and discussions with us concerning our superior proposal. We
also believe that you cannot, consistent with your fiduciary duties,
continue to recommend to your shareholders the transaction with Phelps
Dodge in light of our revised offer.
As before, our execution of a merger agreement would not be contingent
upon a due diligence review. Furthermore, in view of the fact that we have
been granted "early termination" of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act, we are confident that
consummation of our proposed transaction is not subject to any material
regulatory approvals.
Our revised offer represents a compelling opportunity for ASARCO and
its shareholders to improve upon your existing transaction with Phelps
Dodge.
Our offer, of course, continues to be conditioned upon entering into a
negotiated agreement with you. As in the past, we are prepared to meet
with you at any time to negotiate the terms of a merger agreement having
substantially the same terms and conditions that were contained in the
form of merger agreement that was submitted to you on October 5, 1999,
modified to (i) remove
13
<PAGE>
our request for the "match" right in connection with competing proposals
set forth in the "no-shop" provision and replacing it with the relevant
provision in your Phelps Dodge Agreement, (ii) reflect the termination of
your agreement with Phelps Dodge and (iii) incorporate certain provisions
from your agreement with Phelps Dodge, provided that you enter into an
agreement with us on or before October 15, 1999.
Please contact us to schedule a meeting of our respective advisors to
bring this situation to a prompt and satisfactory conclusion for the
shareholders of both of our companies.
Very truly yours,
GRUPO MEXICO, S.A. de C.V.
By /s/ Daniel Tellechea Salido
-------------------------------------------------------------------------
Daniel Tellechea Salido
Managing Director for Administration
and Finance and Alternate Director
By /s/ Gerard Guerrero Diaz Mercado
-------------------------------------------------------------------------
Gerard Guerrero Diaz Mercado
Treasurer
cc: J. Michael Schill, Esq.
Steven Koch
Grupo Mexico is a diversified mining company that ranks among the world's
largest copper, zinc and silver producers. The company's business includes
mining, smelting and refining in Mexico and is one of the world's
lowest-cost operations. Grupo Mexico also operates the largest railroad
system in Mexico.
NOTE: Statements in this press release include "forward-looking
statements" that express expectations of future events or results. All
statements based on future expectations rather than on historical facts
are forward-looking statements that involve a number of risks and
uncertainties, and the company cannot give assurance that such statements
will prove to be correct.
6. CONDITIONS OF THE OFFER. The discussion set forth in the
Introduction to the Offer to Purchase and Section 14 of the Offer
to Purchase is amended and supplemented as follows:
A. The Minimum Condition is amended and restated to read as
follows:
THE MINIMUM CONDITION. CONSUMMATION OF THE OFFER IS
CONDITIONED UPON THERE BEING VALIDLY TENDERED AND NOT PROPERLY
WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES OF COMMON STOCK WHICH, TOGETHER WITH SHARES OF COMMON STOCK
OWNED BY PARENT, CONSTITIUTE AT LEAST 80% OF THE SHARES OF COMMON
STOCK OUTSTANDING ON A FULLY DILUTED BASIS (I.E., AS THOUGH ALL
OPTIONS OR OTHER SECURITIES CONVERTIBLE INTO OR EXERCISABLE OR
EXCHANGEABLE FOR COMMON STOCK HAD BEEN SO CONVERTED, EXERCISED OR
EXCHANGED) (THE "MINIMUM CONDITON").
According to the schedules accompanying the revised form of
merger agreement delivered by ASARCO to Parent's legal advisors on
Monday, October 4, 1999, as of
14
<PAGE>
September 30, 1999 there were 39,921,427 shares of Common Stock
outstanding and 1,799,669 Incentive Shares subject to issuance.
Parent currently owns an aggregate of 3,900,000 shares of
Common Stock, which were acquired in open-market transactions.
Accordingly, Purchaser believes that the Minimum Condition would be
satisfied if an aggregate of 29,476,877 shares of Common Stock are
validly tendered pursuant to the Offer. For purposes of the Offer,
"fully diluted basis" assumes (i) no dilution due to Rights, (ii)
the issuance of all of the Incentive Shares, (iii) no shares of
Common Stock were issued or acquired by ASARCO after September 30,
1999 (other than Common Stock issued pursuant to clause (ii) above)
and no options, warrants, rights or other securities convertible
into or exercisable or exchangeable for shares of Common Stock were
issued or granted after September 30, 1999, and (iv) as of
September 30, 1999 ASARCO had no other obligations to issue Common
Stock or other securities convertible into or exercisable for
shares of Common Stock.
B. The Merger Agreement Condition is amended and restated to
read as follows:
THE MERGER AGREEMENT CONDITION. CONSUMMATION OF THE OFFER IS
CONDITIONED UPON PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION,
THAT THE PD MERGER AGREEMENT HAS BEEN TERMINATED AND ASARCO HAVING
ENTERED INTO A DEFINITIVE MERGER AGREEMENT WITH PARENT AND
PURCHASER THAT WOULD PROVIDE FOR THE ACQUISITION OF ASARCO BY
PARENT OR PURCHASER ("THE MERGER AGREEMENT CONDITION").
In order for the Merger Agreement Condition to be satisfied,
the PD Merger Agreement must be terminated. Depending on ASARCO's
willingness to enter into negotiations with Parent and Purchaser
and the then pending status of any such negotiations, Purchaser may
extend the Offer from time to time until the Merger Agreement
Condition is satisfied.
In the event the Merger Agreement condition is satisfied prior
to 5:00 p.m. on October 15, 1999, Purchaser, under the terms of the
Second Amended and Restated Commitment Letter, will be in the
position to substantially limit its conditions to the following:
Notwithstanding any other provisions of the Offer, and in
addition to (and not in limitation of) the Purchaser's rights
to extend and amend the Offer at any time in its sole
discretion (subject to the provisions of the Agreement), the
Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Common
Stock promptly after termination or withdrawal of the Offer),
pay for, and may delay the acceptance for payment of or,
subject to the restriction referred to above, the payment for,
any tendered shares of Common Stock, and may terminate or amend
the Offer (but only subject to and in accordance with the
agreement relating to the Proposed Merger) if (i) the Minimum
Condition has not been satisfied or (ii) before the time of
acceptance of shares of Common Stock for payment pursuant to
the Offer, any of the following events shall occur:
(a) there shall have been any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced,
enacted, issued or rendered applicable to the Offer or the
Proposed Merger by any domestic or foreign, federal or state
governmental commission which (i) prohibits, or imposes any
material limitations on,
15
<PAGE>
Parent's or the Purchaser's ownership or operation of all or a
material portion of ASARCO's businesses or assets, (ii)
prohibits, or makes illegal the acceptance for payment, payment
for or purchase of Common Stock or the consummation of the
Offer or the Proposed Merger, (iii) results in a material delay
in or restricts the ability of the Purchaser, or renders the
Purchaser unable, to accept for payment, pay for or purchase
some or all of the tendered shares of Common Stock, or (iv)
imposes material limitations on the ability of the Purchaser or
Parent effectively to exercise full rights of ownership of the
Common Stock, including, without limitation, the right to vote
the Common Stock purchased by it on all matters properly
presented to ASARCO's shareholders.
(b) the representations and warranties of ASARCO set forth
in the agreement relating to the Proposed Merger shall not be
true and correct as of the date of consummation of the Offer as
though made on or as of such date except, in each case, (A)
those representations and warranties that address matters only
as of a particular date which are true and correct as of such
date or (B) where the failure of such representations and
warranties to be true and correct (without giving effect to any
qualifications as to "materiality" or "Material Adverse Effect"
set forth therein), would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
ASARCO; or ASARCO shall have breached or failed in any material
respect to perform or comply with any material obligation,
agreement or covenant required by the Agreement to be performed
or complied with by it;
(c) the Agreement shall have been terminated in accordance
with its terms prior to the Expiration Date;
(d) ASARCO shall have entered into a definitive agreement
or agreement in principle with any person with respect to an
ASARCO Takeover Proposal or similar business combination with
ASARCO; or
(e) in the event the consummation of the Offer shall not
have occurred prior to the meeting of the ASARCO shareholders
to approve the Proposed Merger there having occurred (i) after
the date hereof to November 30, 1999, a general banking
moratorium established by Federal or state authorities, a
generally recognized capital markets crisis, as evidenced by a
cumulative 20% decline in the Dow Jones Industrial Average over
a period of five consecutive trading days, or a virtual
cessation in bank and other private debt financings or the
introduction of additional material government restrictions
imposed upon lending institutions which materially affect the
type of transactions contemplated thereby, and (ii) after
November 30, 1999, a material disruption of or material adverse
change in U.S. or developed country financial, banking or
capital market conditions that, in our judgment, is reasonably
likely to materially impair the syndication of the Facilities,
(f) the ASARCO Board shall have withdrawn, or amended,
modified or changed in a manner adverse to Parent or the
Purchaser (including by amendment of the ASARCO Schedule 14D-9
containing the ASARCO Board recommendation to accept the
Offer), its recommendation of the Offer, the Agreement or the
Proposed Merger, or recommended another proposal or offer from
any person other than Parent or the Purchaser, or shall have
resolved to do any of the foregoing;
which in the reasonable judgment of Parent or the Purchaser, in any
such case, and regardless of the circumstances giving rise to such
condition, makes it inadvisable to proceed with the Offer and/or
with such acceptance for payment or payments.
16
<PAGE>
The foregoing conditions will be for the sole benefit of the
Purchaser and Parent and may be waived by Parent or the Purchaser,
in whole or in part at any time and from time to time, in the sole
discretion of Parent or the Purchaser."
7. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS; CERTAIN
LITIGATION. The discussion set forth in Section 15 of the Offer to
Purchase is amended and supplemented as follows:
U.S. ANTITRUST. As noted above, on October 6, 1999, Parent and
Purchaser received notice that they had been granted early
termination of the waiting period under the HSR Act. Accordingly,
Parent is free to consummate the Offer and the Proposed Merger at
any time without any further requirements under the HSR Act.
8. MISCELLANEOUS. The Schedule 14D-1, and any amendments
thereto, may be inspected at, and copies may be obtained from, the
same places and in the same manner as set forth in Section 8 of the
Offer to Purchase (except that they may not be available at the
regional offices of the SEC).
ASMEX CORPORATION
October 8, 1999
17
<PAGE>
Facsimile copies of the Letters of Transmittal, properly completed and duly
signed, will be accepted. The Letter of Transmittal, Common Stock Certificates
(and Rights Certificates, if applicable) and any other required documents should
be sent by each shareholder of ASARCO or his broker, dealer, commercial bank,
trust company or other nominee to the Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
CITIBANK, N.A.
<TABLE>
<S> <C> <C>
BY COURIER: BY MAIL: BY HAND:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
915 Broadway P.O. Box 685 Corporate Trust Window
5th Floor Old Chelsea Station 111 Wall Street, 5th Floor
New York, New York 10010 New York, New York 10113 New York, New York 10043
</TABLE>
Facsimile for Eligible Institutions: (212) 505-2248
To Confirm Facsimile Only: (800) 270-0808
-------------------
Any questions or requests for assistance may be directed to the Information
Agent or the Dealer
Manager at their respective telephone numbers and locations listed below.
Additional copies of the Offer to Purchase, this Supplement, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent at its address and telephone numbers set forth below. Holders
of share of Common Stock may also contact their broker, dealer, commercial bank
or trust company or other nominee for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
UNITED STATES
77 Water Street
New York, New York 10005
CALL TOLL-FREE: (800) 714-3305
or
(212) 269-5550 (call collect)
EUROPE
Royex House, Aldermanbury Square
London, England EC2V 7HR
(44) 171 600 5005 (call collect)
THE DEALER MANAGER FOR THE OFFER IS:
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
Telephone: (212) 270-3298
<PAGE>
Exhibit 99(a)(11)
GRUPO MEXICO INCREASES TENDER OFFER
TO ACQUIRE ASARCO INC.
TO $29.50 PER SHARE IN CASH
RECEIVES EARLY TERMINATION TO HART-SCOTT-RODINO WAITING PERIOD
Mexico City (October 7, 1999) -- Grupo Mexico, S.A. de C.V., announced today
that it has revised its proposal to acquire all of the outstanding shares of
ASARCO Incorporated (NYSE:AR) to increase the price to $29.50 per share in
cash. The revised offer, which values ASARCO at $2.24 billion (including
assumption of debt), is scheduled to expire at 12:00 midnight, New York City
Time, on Monday, October 25, 1999, unless extended.
Following the completion of the tender offer, Grupo Mexico intends to
consummate a second step merger in which all remaining ASARCO shareholders
will also receive the same cash price paid in the tender offer.
Earlier today, Grupo Mexico sent the following letter to the Board of
Directors of ASARCO:
October 7, 1999
Board of Directors
ASARCO Incorporated
180 Maiden Lane
New York, NY 10038
Attention: Francis R. McAllister
Chairman and Chief Executive Officer
Dear Members of the Board:
Based on our assessment of the pending offer by Phelps Dodge
Corporation as reflected in your announced agreement with them, and our view of
the intrinsic value in ASARCO Incorporated that Grupo Mexico, S.A. de C.V.,
could realize if Grupo Mexico owned ASARCO, we are today increasing the price in
our September 27 tender offer to ASARCO shareholders for all outstanding shares
of ASARCO to $29.50 per share in cash. The other terms of our September 27
tender offer remain substantially unchanged.
Our revised offer provides value to your shareholders that is
demonstrably superior to your agreement with Phelps Dodge. This offer
represents a premium of 5% over the value of your recently announced
agreement with Phelps Dodge based upon the October 6, 1999 closing price of
$53.00 per share for Phelps Dodge common stock, and a premium of 59% over
ASARCO's unaffected stock price on August 20, 1999, immediately prior to the
announcement of Phelps Dodge's proposal.
As a result, we believe that you can, and indeed are obligated to,
meet with us and discuss our revised offer. Accordingly, we request that,
pursuant to Section 5.9 of your agreement with Phelps Dodge, you elicit such
advice and make such determinations in view of your fiduciary duties so
that ASARCO would be in a position to immediately engage in negotiations and
discussions with us concerning our superior proposal. We also believe that
you cannot, consistent with your fiduciary duties, continue to recommend to
your shareholders the transaction with Phelps Dodge in light of our revised
offer.
As before, our execution of a merger agreement would not be
contingent upon a due diligence review. Furthermore, in view of the fact that
we have been granted "early termination" of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act, we are confident that
consummation of our proposed transaction is not subject to any material
regulatory approvals.
Our revised offer presents a compelling opportunity for ASARCO and
its shareholders to improve upon your existing transaction with Phelps Dodge.
Our offer, of course, continues to be conditioned upon entering into
a negotiated agreement with you. As in the past, we are prepared to meet with
you at any time to negotiate the terms of a merger agreement having
substantially the same terms and conditions that were contained in the form
of merger agreement that was submitted to you on October 5, 1999, modified to
(i) remove our request for the "match" right in connection with competing
proposals set forth in the "no-
1
<PAGE>
shop" provision and replacing it with the relevant provision in your Phelps
Dodge agreement, (ii) reflect the termination of your agreement with Phelps
Dodge and (iii) incorporate certain provisions from your agreement with Phelps
Dodge, provided that you enter into an agreement with us on or before October
15, 1999.
Please contact us to schedule a meeting of our respective
advisors to bring this situation to a prompt and satisfactory conclusion for the
shareholders of both of our companies.
Very truly yours,
GRUPO MEXICO, S.A. de C.V.
By /s/ Daniel Tellechea Salido
-----------------------------------
Daniel Tellechea Salido
Managing Director for
Administration and Finance and
Alternative Director
By /s/ Genaro Guerrero Diaz Mercado
-----------------------------------
Genaro Guerrero Diaz Mercado
Treasurer
cc J. Michael Schell, Esq.
Steven Koch
Grupo Mexico is a diversified mining company that ranks among the world's
largest copper, zinc and silver producers. The company's business includes
mining, smelting and refining in Mexico and is one of the world's lowest-cost
operations. Grupo Mexico also operates the largest railroad system in Mexico.
NOTE: Statements in this press release include "forward-looking statements" that
express expectations of future events or results. All statements based on future
expectations rather than on historical facts are forward-looking statements that
involve a number of risks and uncertainties, and the company cannot give
assurance that such statements will prove to be correct.
2
<PAGE>
Exhibit 99(b)(2)
[LOGO]
THE CHASE MANHATTAN BANK CHASE SECURITIES INC.
270 Park Avenue 270 Park Avenue
New York, New York 10017 New York, New York 10017
October 5, 1999
ASMEX Corporation
Senior Secured Credit Facilities
Amended and Restated Commitment Letter
Grupo Mexico, S.A. de C.V.
Baja California 200
Colonia Roma Sur
Mexico, D.F. Mexico
06760
Attention: Daniel Tellechea
Ladies and Gentlemen:
This Amended and Restated Commitment Letter hereby, subject to the terms
and conditions set forth herein, amends and restates the Commitment Letter dated
September 24, 1999 (the "ORIGINAL COMMITMENT"), among Grupo Mexico, Chase and
CSI (each as defined below). You have advised The Chase Manhattan Bank ("Chase")
and Chase Securities Inc. ("CSI") that ASMEX Corporation, a Delaware corporation
(the "BORROWER"), a wholly-owned subsidiary of Grupo Mexico, S.A. de C.V., a
Mexican corporation ("GRUPO MEXICO"), intends to make a cash tender offer (the
"TENDER OFFER") for common stock of Asarco Incorporated, a New Jersey
corporation ("ASARCO"), representing at least 80% of the ordinary voting power
of all of the shares of capital stock of Asarco on a fully diluted basis
(including stock of Asarco owned by
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
2
Grupo Mexico and subsidiaries prior to the Tender Offer), to be followed by the
merger of the Borrower into Asarco, with Asarco thereby becoming a wholly-owned
subsidiary of Grupo Mexico.
We understand that to provide funds for the Tender Offer and to pay
related fees and expenses, Grupo Mexico requires that senior secured financing
be made available to the Borrower in the amount of up to $823 million (the "A
TENDER FACILITY"). We further understand that, following the successful
completion of the Tender Offer, the Borrower is to be merged into Asarco with
Asarco thereby becoming a wholly-owned subsidiary of Grupo Mexico (the "MERGER"
and, together with the Tender Offer, the "Transactions"), and that (whether or
not the Merger is immediately effected) Grupo Mexico will require senior
financing for Asarco (the "R/C FACILITIES") in an aggregate amount equal to $250
million in order to refinance certain indebtedness of Asarco and to provide
funds for ongoing general corporate purposes. The A Tender Facility and the R/C
Facilities are herein collectively referred to as the "FACILITIES".
In that connection, you have requested that CSI agree to structure,
arrange and syndicate the Facilities, and that Chase commit to provide the
entire principal amount of the Facilities and to serve as administrative agent
for the Facilities.
CSI is pleased to advise you that it is willing to act as exclusive
advisor, lead arranger and book manager for the Facilities.
Furthermore, Chase is pleased to advise you of its commitment to
provide the entire amount of the Facilities upon the terms and subject to the
conditions set forth or referred to in this amended and restated commitment
letter (the "AMENDED AND RESTATED COMMITMENT LETTER"), in the Amended and
Restated Summary of Terms and Conditions attached hereto as Exhibit A (the "TERM
SHEET") and in the Fee Letter dated September 24, 1999 (the "FEE LETTER"). We
intend to syndicate the Facilities to a group of financial institutions
(together with Chase, the "LENDERS") identified by us in consultation with you.
Chase shall be relieved of its obligation to provide the entire amount of the
Facilities to the extent that the offers of Lenders other than Chase to provide
any portion of the Facilities are accepted.
CSI intends to commence syndication efforts promptly, and you agree
actively to assist CSI in its efforts to complete a syndication satisfactory to
it prior to the Tender Closing Date referred to in the Term Sheet. Such
assistance shall include (a) your using commercially reasonable efforts to
ensure that the syndication efforts benefit materially from your existing
lending relationships, (b) direct contact between senior management and advisors
of yourselves and the Borrower and the proposed Lenders, (c) assistance in the
preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication and (d) the hosting,
with CSI, of one or more meetings of prospective Lenders.
It is agreed that Chase will act as the sole and exclusive
Administrative Agent for the Facilities and as the Collateral Agent in
connection with the Facilities, and that CSI will act as the sole and exclusive
advisor, arranger and book manager for the Facilities, and each will, in such
capacities, perform the duties and exercise the authority customarily performed
and exercised by it in such roles. You agree that no other agents, co-agents,
arrangers or book
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
3
managers will be appointed, no other titles will be awarded and no compensation
(other than that expressly contemplated by the Term Sheet and the Fee Letter
referred to below) will be paid in connection with the Facilities unless you and
we shall so agree.
CSI will (in consultation with you) manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. To assist CSI in its syndication efforts, you agree promptly to prepare
and provide to CSI and Chase all information with respect to Grupo Mexico, Grupo
Minero Mexico, S.A. de C.V., a Mexican corporation ("GMM") , the Borrower and
their respective subsidiaries, the Transactions and the other matters
contemplated hereby, including all financial information and projections (the
"PROJECTIONS"), as we may reasonably request in connection with the arrangement
and syndication of the Facilities. You hereby represent and covenant that (a)
all information other than the Projections (the "INFORMATION") that has been or
will be made available to Chase or CSI by you or any of your representatives is
or will be, when furnished, complete and correct in all material respects and
does not or will not, when furnished, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (b) the Projections that have been or will be
made available to Chase or CSI by you or any of your representatives have been
or will be prepared in good faith based upon reasonable assumptions. You
understand that in arranging and syndicating the Facilities we may use and rely
on the Information and Projections without independent verification thereof.
As consideration for Chase's commitment hereunder and CSI's agreement
to perform the services described herein, you agree to pay and to cause the
Borrower to pay to Chase the non-refundable fees set forth in Annex I to the
Term Sheet and in the Fee Letter.
Chase's commitment hereunder and CSI's agreement to perform the
services described herein are subject to
(a) (i) there not occurring or becoming known to us any
material adverse condition or material adverse change in or affecting
the business, operations, property or financial condition of Grupo
Mexico and its subsidiaries, GMM and its subsidiaries, or Asarco and
its subsidiaries, in each case taken as a whole, which (in the case of
Asarco and its subsidiaries) is not already disclosed and publicly
available or otherwise known by any of our officers who is working with
you on the Transactions; PROVIDED, HOWEVER, that any adverse effect
that copper prices have had or may have on the business, operations,
property or financial condition of Grupo Mexico and its subsidiaries,
GMM and its subsidiaries, or Asarco and its subsidiaries, in each case
taken as a whole, shall not be deemed to be such a material adverse
condition or material adverse change for purposes of this clause
(a)(i); and (ii) our not becoming aware after September 24, 1999, of
any information or other matter affecting Grupo Mexico and its
subsidiaries, GMM and its subsidiaries, Asarco and its subsidiaries, in
each case taken as a whole, or the
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
4
transactions contemplated hereby which is inconsistent in a material
and adverse manner with any such information or other matter disclosed
to us prior to September 24, 1999, and which (in the case of Asarco and
its subsidiaries) is not already disclosed and publicly available or
otherwise known by any of our officers who is working with you on the
Transactions,
(b) there shall not have been any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced, enacted,
issued or applicable to the Tender Offer or the Merger by any domestic
or foreign federal or state governmental regulatory or administrative
agency or authority or court or legislative body or commission which
(i) prohibits, or imposes any material limitations on, Grupo Mexico's
or Asmex' ownership or operation of all or a material portion of
Asarco's businesses or assets, (ii) prohibits, or makes illegal the
acceptance for payment, payment for or purchase of Asarco common stock
or the consummation of the Tender Offer or the Merger, (iii) results in
a material delay in or restricts the ability of Grupo Mexico, or
renders Grupo Mexico unable, to accept for payment, pay for or purchase
some or all of the tendered shares of Asarco common stock, or (iv)
imposes material limitations on the ability of Asmex or Grupo Mexico
effectively to exercise full rights of ownership of the Asarco common
stock, including, without limitation, the right to vote the Asarco
common stock purchased by it on all matters properly presented to
Asarco's shareholders,
(c) there not having occurred (i) after the date hereof to
November 30, 1999, a general banking moratorium established by Federal
or state authorities, a generally recognized capital markets crisis, as
evidenced by a cumulative 20% decline in the Dow Jones Industrial
Average over a period of five (5) consecutive trading days, or a
virtual cessation in bank and other private debt financings or the
introduction of additional material government restrictions imposed
upon lending institutions which materially affect the type of
transactions contemplated thereby, and (ii) after November 30, 1999, a
material disruption of or material adverse change in U.S. or developed
country financial, banking or capital market conditions that, in our
judgment, is reasonably likely to materially impair the syndication of
the Facilities,
(d) our satisfaction that prior to and during the syndication
of the Facilities there shall be no competing offering, placement or
arrangement of any debt securities or bank financing by or on behalf of
Grupo Mexico or any affiliate thereof,
(e) in the case of the A Tender Facility, our satisfaction
with the conditions of the Tender Offer which will include, in any
event (unless otherwise satisfied in connection with the definitive
Merger agreement with Asarco), (i) invalidation, redemption or other
inapplicability of the rights issued under Asarco's Shareholder Rights
Agreement dated as of January 28, 1998, as amended, (ii) invalidation
or satisfaction of the requirements of Article 7 of Asarco's Restated
Certificate of Incorporation with respect to the Transactions such that
following consummation of the Tender Offer the Merger may be
consummated without the affirmative vote of the holders of any Asarco
shares other than the Borrower, (iii) invalidity, inapplicability or
satisfaction (if necessary) of Article 10 of
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
5
Asarco's Restated Certificate of Incorporation with respect to the
Transactions or the Facilities, (iv) satisfaction or inapplicability of
the requirements of Section 14A:10A of the New Jersey Business
Corporation Act with respect to the Merger such that following
consummation of the Tender Offer the Merger may be consummated without
the affirmative vote of the holders of any Asarco shares other than the
Borrower and (v) obtaining all regulatory approvals and consents
(including Hart-Scott-Rodino and other approvals or consents, if any)
necessary to effect the Transactions,
(f) in the case of the R/C Facilities, prior or concurrent
disbursement of the A Tender Facility, successful consummation of the
Tender Offer and our satisfaction with the terms and conditions of the
definitive Merger agreement,
(g) the negotiation, execution and delivery on or prior to the
Tender Closing Date of definitive documentation with respect to the
Facilities satisfactory to all parties, and
(h) the other conditions set forth or referred to in the Term
Sheet.
The terms and conditions of Chase's commitments hereunder and of the Facilities
are not limited to those set forth herein and in the Term Sheet and Fee Letter.
Those matters that are not covered by the provisions hereof and of the Term
Sheet are subject to the approval and agreement of Chase, CSI and Grupo Mexico.
Notwithstanding the foregoing, the Term Sheet and Fee Letter are intended to
reflect all material closing conditions, representations and warranties,
covenants and events of default, subject however, in each case, to such
additional provisions as shall be appropriate to take into account developments
after September 24, 1999.
You agree (a) to indemnify and hold harmless Chase, CSI, their
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an "INDEMNIFIED PERSON") from and against any and all losses,
claims, damages and liabilities to which any such indemnified person may become
subject arising out of or in connection with this Amended and Restated
Commitment Letter, the Facilities, the use of the proceeds thereof, the
Transactions or any related transaction or any claim, litigation, investigation
or proceeding relating to any of the foregoing, regardless of whether any
indemnified person is a party thereto, and to reimburse each indemnified person
upon demand for any legal or other expenses incurred in connection with
investigating or defending any of the foregoing, PROVIDED that the foregoing
indemnity will not, as to any indemnified person, apply to losses, claims,
damages, liabilities or related expenses to the extent they are found by a
final, non-appealable judgment of a court to arise from the willful misconduct
or gross negligence of such indemnified person, and (b) to reimburse Chase, CSI
and their affiliates on demand for all reasonable and documented out-of-pocket
expenses (including due diligence expenses, syndication expenses, consultant's
fees and expenses, travel expenses, and reasonable fees, charges and
disbursements of counsel) incurred in connection with the Facilities and any
related documentation (including this Amended and Restated Commitment Letter,
the Term Sheet, the Fee Letter and the definitive financing documentation) or
(without duplication of fees or costs for administrative services covered in the
Fee Letter) the administration, amendment, modification or waiver thereof. No
indemnified person shall be liable for any damages arising from the use by
others of Information or other materials obtained
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
6
through electronic, telecommunications or other information transmission
systems, or for any special, indirect, consequential or punitive damages in
connection with the Facilities.
You acknowledge that Chase and/or CSI may be providing debt financing,
equity capital or other services (including financial advisory services) to
other companies in respect of which you may have conflicting interests regarding
the transactions described hereby and otherwise. Neither Chase nor CSI will use
confidential information obtained from you by virtue of the transactions
contemplated hereby or other relationships with you in connection with the
performance by Chase or CSI of services for other companies, and neither Chase
nor CSI will furnish any such information to other companies. You also
acknowledge that neither Chase nor CSI has any obligation to use in connection
with the transactions contemplated hereby, or to furnish to you, confidential
information obtained from other companies.
This Amended and Restated Commitment Letter shall not be assignable by
you without the prior written consent of Chase and CSI (and any purported
assignment without such consent shall be null and void), is intended to be
solely for the benefit of the parties hereto and is not intended to confer any
benefits upon, or create any rights in favor of, any person other than the
parties hereto. This Amended and Restated Commitment Letter may not be amended
or waived except by an instrument in writing signed by you, Chase and CSI. This
Amended and Restated Commitment Letter may be executed in any number of
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one agreement. Delivery of an executed signature page
of this Amended and Restated Commitment Letter by facsimile transmission shall
be effective as delivery of a manually executed counterpart hereof. This Amended
and Restated Commitment Letter and the Fee Letter set forth the entire
understanding of the parties with respect thereto. This Amended and Restated
Commitment Letter shall be governed by, and construed in accordance with, the
laws of the State of New York.
This Amended and Restated Commitment Letter is delivered to you on the
understanding that neither this Amended and Restated Commitment Letter, the Term
Sheet or the Fee Letter nor any of their terms or substance shall be disclosed,
directly or indirectly, to any other person except (a) to your officers, agents
and advisors who are directly involved in the consideration of this matter or
(b) as may be compelled in a judicial or administrative proceeding or as
otherwise required by law (in which case you agree to inform us promptly
thereof), PROVIDED, that the foregoing restrictions shall cease to apply (except
in respect of the Fee Letter and its terms and substance) after this Amended and
Restated Commitment Letter has been accepted by you.
The compensation, reimbursement, indemnification and confidentiality
provisions contained herein and in the Fee Letter shall remain in full force and
effect regardless of whether definitive financing documentation shall be
executed and delivered and notwithstanding the termination of this Amended and
Restated Commitment Letter or Chase's commitments hereunder.
If the foregoing correctly sets forth our agreement, please indicate
your acceptance of the terms hereof and of the Term Sheet by returning to us
executed counterparts
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
7
hereof not later than 6:00 p.m., New York City time, on October 5, 1999 (at
which time this Amended and Restated Commitment Letter shall expire if not
executed and delivered by you). Further, this Amended and Restated Commitment
Letter and the amendments of the Original Commitment and the Summary of Terms
and Conditions attached thereto as Exhibit A set forth herein and in the Term
Sheet shall not become effective UNLESS Grupo Mexico and Asarco execute and
deliver a definitive Merger agreement satisfactory to Chase and CSI, not later
than 5:00 p.m., New York City time, on October 8, 1999.
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
8
Chase and CSI are pleased to have been given the opportunity to assist
you in connection with this important financing.
Upon the effectiveness of this Amended and Restated Commitment Letter,
references in the Fee Letter to the "Commitment Letter" (other than the
reference thereto in clause (i) of the second paragraph of the Fee Letter) shall
mean the Original Commitment, as amended and restated hereby. Except as set
forth in the preceding sentence, the Fee Letter shall remain unmodified and in
full force and effect.
Very truly yours,
THE CHASE MANHATTAN BANK
By: /s/ Deborah Davey
---------------------------------------
Name: Deborah Davey
Title: Vice President
CHASE SECURITIES INC.
By: /s/ Christopher I. Teague
---------------------------------------
Name: Christopher I. Teague
Title: Managing Director
Accepted and agreed to as of the
date first written above by:
GRUPO MEXICO, S.A. DE C.V.
By: /s/ Daniel Tellechea Salido
----------------------------------
Name: Daniel Tellechea Salido
Title: Managing Director For
Administration and Finance
By: /s/ Genaro Guerrero Diaz Mercado
------------------------------------
Name: Genaro Guerrero Diaz Mercado
Title: Treasurer
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
Exhibit A
SENIOR SECURED CREDIT FACILITIES
Amended and Restated Summary of Terms and Conditions
October 5, 1999
AS USED HEREIN, CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN SHALL
HAVE THE RESPECTIVE MEANINGS ASCRIBED TO THEM IN THE AMENDED AND RESTATED
COMMITMENT LETTER TO WHICH THIS AMENDED AND RESTATED SUMMARY OF TERMS AND
CONDITIONS IS ATTACHED.
This Amended and Restated Summary of Terms and Conditions hereby,
subject to the terms and conditions set forth in the Amended and Restated
Commitment Letter, amends and restates the Summary of Terms and Conditions dated
September 24, 1999. The following sets forth the terms and conditions for the
senior secured credit facilities that will be made available to ASMEX
Corporation, a Delaware corporation ("ASMEX"), in connection with Asmex'
proposed cash tender offer (the "TENDER OFFER" and, together with the Merger
defined below, the "TRANSACTIONS") for shares of common stock of Asarco
Incorporated (the "SHARES"), a New Jersey corporation ("ASARCO"), representing
not less than 80% of the ordinary voting power of all of the shares of capital
stock of Asarco on a fully diluted basis, including stock of Asarco owned by
Grupo Mexico, S.A. de C.V., ("GRUPO MEXICO") and subsidiaries prior to the
Tender Offer (determined in a manner satisfactory to the Arranger). The
conditions precedent to the obligation of Asmex to purchase the Shares pursuant
to the Tender Offer will include, unless otherwise satisfied in connection with
the definitive Merger agreement with Asarco, the following: (i) invalidation,
redemption or other inapplicability of the rights issued under Asarco's
Shareholder Rights Agreement dated as of January 28, 1998, as amended, (ii)
invalidation or satisfaction of the requirements of Article 7 of Asarco's
Restated Certificate of Incorporation with respect to the Transactions such
that, following consummation of the Tender Offer, the Merger can be consummated
without the affirmative vote of the holders of any Asarco shares other than
Asmex, (iii) invalidity, inapplicability or satisfaction (if necessary) of
Article 10 of Asarco's Restated Certificate of Incorporation with respect to the
Transactions or the Facilities, (iv) satisfaction or inapplicability of the
requirements of Section 14A:10A of the New Jersey Business Corporation Act with
respect to the Merger such that following consummation of the Tender Offer the
Merger can be consummated without the affirmative vote of the holders of any
Asarco shares other than Asmex and (v) obtaining all regulatory approvals and
consents (including Hart-Scott-Rodino, and other approvals or consents, if any)
necessary to effect the Transactions. The purchase of shares will be funded
through credit facilities (the "A Tender Facility" referred to below) together
with certain cash from Grupo Minero Mexico, S.A. de C.V. ("GMM") and Grupo
Mexico. Following the purchase of the Shares pursuant to the Tender Offer,
Asmex, a direct wholly-owned subsidiary of Grupo Mexico, is to be merged into
Asarco with Asarco thereby becoming a wholly-owned subsidiary of Grupo Mexico
and with Asarco shareholders receiving solely cash consideration (the "MERGER").
The following also sets forth the terms and conditions for the other senior
credit facilities (the "R/C Facilities" referred to below) that will be made
available to Asarco upon and subsequent to consummation of the Tender Offer.
<PAGE>
2
I. PARTIES
Borrowers: Under the A Tender Facility, ASMEX
Corporation ("ASMEX") and, after the Merger,
Asarco; and under the R/C Facilities, Asarco
(each of Asmex and Asarco being sometimes
referred to below as a "BORROWER").
Guarantor(s): Under the A Tender Facility, Grupo Mexico;
and under the R/C Facilities, Grupo Mexico
and, until consummation of the Merger,
Asmex.
Advisor, Lead Arranger
and Book Manager: Chase Securities Inc. (in such capacity, the
"ARRANGER").
Administrative Agent: The Chase Manhattan Bank ("CHASE" and, in
such capacity, the "ADMINISTRATIVE AGENT").
Lenders: A syndicate of banks, financial institutions
and other entities, including Chase,
arranged by the Arranger in consultation
with Grupo Mexico (collectively, the
"LENDERS").
II. TYPES AND AMOUNTS OF
CREDIT FACILITIES
1. A TENDER FACILITY
Type and Amount of
Facility: An aggregate principal amount of up to $823
million will be available to Asmex under a
senior secured credit facility (the "A
TENDER FACILITY").
Availability: The Loans under the A Tender Facility (the
"A TENDER LOANS") shall be made in a single
drawing on the Tender Closing Date (as
defined below); provided that in the event
of tender of less than 100% of the Shares of
Asarco (other than those owned by Grupo
Mexico and subsidiaries) in the Tender
Offer, the unused portion of the commitments
under the A Tender Facility
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
3
will be reserved for drawing on the Merger
closing date for payment for the remaining
Shares of Asarco.
Amortization: The A Tender Loans shall be repayable in
full on the date eighteen (18) months after
the Tender Closing Date (the date on which
the A Tender Loans are repayable, the
"MATURITY DATE").
Purpose: The proceeds of the A Tender Loans shall be
used to purchase Shares.
2. R/C FACILITIES
Type and Amount of
Facility: An aggregate principal amount of up to $250
million will be available to Asarco
subsequent to consummation of the Tender
Offer under a senior secured revolving
credit facility (the "R/C FACILITIES"). Such
aggregate principal amount may, based on the
actual amount of eligible accounts
receivable of Asarco available to secure the
R/C Facilities and in the sole discretion of
the Arranger, be increased provided that the
A Tender Loans are prepaid in an amount
equal to the amount of such increase. Such
aggregate principal amount may, based on the
aggregate principal amount of Existing R/C
Facilities (as defined below) available to
Asarco and remaining in place subsequent to
the consummation of the Tender Offer, be
reduced in an amount equal to the amount of
such Existing R/C Facilities.
Availability: The Loans under the R/C Facilities (the "R/C
LOANS" and together with the A Tender Loans,
the "LOANS") shall be available for
borrowing, repayment and reborrowing during
the period from the Tender Closing Date to
the date thirty-three (33) months
thereafter.
Termination: The R/C Facilities shall terminate, and all
outstanding R/C Loans shall be repayable in
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
4
full, on the date three (3) years after the
Tender Closing Date.
Purpose: The proceeds of the R/C Loans shall be used
(i) to refinance outstanding indebtedness of
Asarco under the Existing R/C Facilities (as
defined below) and in the event of an
increase in the amount of the R/C Facilities
above $250 million to repay a portion of
outstanding A Tender Loans and (ii) for
working capital purposes of Asarco. The
"EXISTING R/C Facilities" means the credit
facilities identified as such by Grupo
Mexico and the Administrative Agent and
which are on terms reasonably acceptable to
the Arranger and Grupo Mexico. The aggregate
principal amount of the Existing R/C
Facilities is believed to total $800 million
and to be for working capital purposes
(based on publicly available information).
III. CERTAIN PAYMENT PROVISIONS
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments
and Commitment Reductions: All or a portion of the Loans may be prepaid
at any time and the unutilized portion of
the Facilities may be terminated in whole or
in part (in minimum amounts to be agreed
upon) at the respective Borrower's option
(except, in the case of the R/C Facilities
prior to the Tender Closing Date, at the
option of Grupo Mexico). A Tender Loans once
prepaid may not be reborrowed.
Mandatory Prepayments and
Commitment Reductions: The A Tender Loans will be prepaid, undrawn
commitments for A Tender Loans will be
reduced and replaced, and R/C Loans will be
prepaid, in that order, to the extent of the
net cash proceeds received from the
following (in each case subject to customary
exclusions to be agreed):
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
5
-- any asset sales by Asarco and designated
subsidiaries
-- any debt issuances by Asarco (other than
R/C Loans, except for R/C Loans required
to reduce the A Tender Facility)
-- any equity issuances by Asmex or Asarco
(to any party other than Asmex or Grupo
Mexico)
-- any sale of Asarco stock
-- any proceeds received by Asarco as a
result of the exercise (by holders) of
warrants relating to shares of Grupo
Mexico held in a trust for the benefit
of Asarco
IV. GUARANTEES AND COLLATERAL
Guarantees: (a) All obligations of Asmex (and, after the
Merger, of Asarco) in respect of the A
Tender Facility will be unconditionally
guaranteed by Grupo Mexico.
(b) All obligations of Asarco in respect of
the R/C Facilities will be unconditionally
guaranteed by Grupo Mexico until the A
Tender Loans are repaid in full (except as
otherwise noted below in the case of
Alternative R/C Facilities, and provided the
conditions for release of the collateral for
such guarantee obligations have been met),
and by Asmex until consummation of the
Merger.
The Borrowers and guarantors are
collectively referred to herein as "CREDIT
PARTIES."
Collateral: (a) The obligations of Asmex in respect of
the Facilities will be secured by a
perfected first priority security interest
in the Shares at any time owned by it.
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
6
(b) The obligations of Grupo Mexico under
its guarantees of the A Tender Facility and
the R/C Facilities will be secured by a
perfected first priority security interest
in (1) shares of GMM representing 100% of
the outstanding shares of GMM (other than
shares not exceeding 1.50% held by others)
and (2) all shares of Asarco held by Grupo
Mexico, both immediately prior to the making
of the A Tender Loans (presently
representing approximately 9.8% of the
outstanding shares of Asarco) and after the
Merger. In addition, Grupo Mexico will
covenant to maintain at all times, in
support of its guarantees (so long as they
remain in effect), an amount of unencumbered
cash and short-term authorized money market
investments (to be agreed with the Arranger,
including deposits with approved banks,
which in Mexico shall include only Banamex
and Bancomer) equal to the lower of (A) 6
months of interest on the outstanding A
Tender Loans and (B) $100 million.
(c) The obligations of Asarco in respect of
the R/C Facilities will be secured by
accounts receivable of Asarco (except as
otherwise provided below in the case of
"Alternative R/C Facilities").
The security documentation will provide that
in the event of default and enforcement or
foreclosure at a time when both Asarco
shares and GMM shares are held as collateral
for the defaulted obligation, the collateral
agent will be instructed to exercise
reasonable efforts (for a period of up to 45
days) to sell collateral consisting of
Asarco shares before selling collateral
consisting of GMM shares.
Certain Releases of
Collateral: So long as no Default has occurred and is
continuing:
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
7
(a) The pledge of Asarco Shares securing
guarantees of the R/C Loans will terminate
when the A Tender Loans are repaid in full,
PROVIDED that at such time (i) the R/C Loans
and R/C Facilities are not Alternative R/C
Loans and Alternative R/C Facilities, and
(ii) Asarco is in compliance with its
financial covenant relating to minimum
EBITDA;
(b) The pledge of Asarco Shares securing
guarantees of the Alternative R/C Loans will
terminate when (i) the A Tender Loans are
repaid in full, and (ii) Asarco's senior
unsecured long-term indebtedness is rated at
or above BBB-by S&P and Baa3 by Moody's;
(c) The pledge of GMM shares securing Grupo
Mexico guarantees of the Facilities will be
reduced pro rata (on a percentage basis)
with reductions (by repayment) of the
outstanding principal of the A Tender Loans,
PROVIDED that (except as described in clause
(d) below) the percentage of outstanding GMM
shares remaining in pledge as security for
guarantees of the Facilities may not thereby
be reduced below 51% (or such higher
percentage, if any, as is required for
approval of corporate actions of GMM that
are subject to shareholder consent and for
election of a majority of the Board of
Directors of GMM);
(d) At such time as the outstanding
principal of the A Tender Loans has been
reduced (by repayment) to an amount equal to
or less than 25% of the original principal
amount of the A Tender Loans, all GMM shares
remaining in pledge as security for
guarantees of the Facilities will be
released, PROVIDED that Asarco's senior
unsecured long-term indebtedness is rated at
or above BBB- by S&P and Baa3 by Moody's.
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
8
V. CERTAIN CONDITIONS The availability of the Facilities shall be
conditioned upon satisfaction of, among
other things, the following conditions
precedent (the date upon which all such
conditions precedent shall be satisfied and
the A Tender Facility is first utilized
being herein called the "TENDER CLOSING
DATE") and the occurrence of the first
utilization of the A Tender Facility on or
before the date nine (9) months after
September 24, 1999, and other conditions
precedent customary for facilities and
transactions of this type, including
evidence of authority and receipt of
necessary consents and approvals:
(a) Each Credit Party shall have executed
and delivered satisfactory definitive
financing documentation with respect to the
Facilities (the "CREDIT DOCUMENTATION").
(b) On or prior to the Tender Closing Date,
cash in an amount not less than $270 million
shall be contributed to the equity capital
of Asmex through Grupo Mexico (i) from
existing cash resources of GMM in an
aggregate amount not less than $250 million,
and (ii) from existing cash resources of
Grupo Mexico, in an amount not less than $20
million.
(c) Satisfaction of the Arranger with all
material terms and conditions of the Tender
Offer and the definitive Merger agreement.
In addition, the Tender Offer and the Merger
shall have been, or shall be concurrently,
consummated in a manner satisfactory to the
Administrative Agent (including satisfaction
of the Administrative Agent with all
determinations as to the satisfaction of
material conditions thereunder) and no such
condition of the Tender Offer or the
definitive Merger agreement shall have been
waived, amended, supplemented or otherwise
modified without the prior written consent
of the Administrative Agent; and
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
9
Asmex shall have acquired shares of common
stock of Asarco representing not less than
80% of the ordinary voting power of all of
the shares of capital stock of Asarco on a
fully diluted basis, including stock of
Asarco owned by Grupo Mexico and
subsidiaries prior to the Tender Offer
(determined in a manner satisfactory to the
Arranger).
(d) Grupo Mexico and Asarco shall have
entered into a definitive merger agreement
in form and substance satisfactory to the
Administrative Agent, or Grupo Mexico shall
have made satisfactory arrangements for the
initiation of a statutory short-form merger,
in each case pursuant to which Asarco will
become a wholly-owned subsidiary of Grupo
Mexico with Grupo Mexico able to exercise
full control over the business and affairs
of Asarco.
(e) Invalidation or satisfaction of the
requirements of Article 7 of Asarco's
Restated Certificate of Incorporation with
respect to the Transactions such that,
following consummation of the Tender Offer,
the Merger can be consummated without the
affirmative vote of the holders of any
Asarco shares other than Asmex; and
invalidity, inapplicability or satisfaction
(if necessary) of Article 10 of Asarco's
Restated Certificate of Incorporation with
respect to the Transactions or the
Facilities.
(f) Satisfaction or inapplicability of the
requirements of Section 14A:10A of the New
Jersey Business Corporation Act with respect
to the Merger such that following
consummation of the Tender Offer the Merger
can be consummated without the affirmative
vote of the holders of any Asarco shares
other than Asmex.
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
10
(g) Invalidation, redemption or other
inapplicability of the rights issued under
Asarco's Shareholder Rights Agreement dated
as of January 28, 1998, as amended.
(h) There not being any statute, rule,
regulation, judgment, order or injunction
promulgated, entered, enforced, enacted,
issued or applicable to the Tender Offer or
the Merger by any domestic or foreign
federal or state governmental regulatory or
administrative agency or authority or court
or legislative body or commission which (i)
prohibits, or imposes any material
limitations on, Grupo Mexico's or Asmex'
ownership or operation of all or a material
portion of Asarco's businesses or assets,
(ii) prohibits, or makes illegal the
acceptance for payment, payment for or
purchase of Asarco common stock or the
consummation of the Tender Offer or the
Merger, (iii) results in a material delay in
or restricts the ability of the Grupo
Mexico, or renders Grupo Mexico unable, to
accept for payment, pay for or purchase some
or all of the tendered shares of Asarco
common stock, or (iv) imposes material
limitations on the ability of Asmex or Grupo
Mexico effectively to exercise full rights
of ownership of the Asarco common stock,
including, without limitation, the right to
vote the Asarco common stock purchased by it
on all matters properly presented to
Asarco's shareholders.
(i) The Lenders, the Administrative Agent
and the Arranger shall have received all
fees required to be paid, and all expenses
for which invoices have been presented, on
or before the Tender Closing Date.
(j) The documents and materials filed
publicly by Grupo Mexico (and its
affiliates) and Asmex in connection with the
Tender Offer shall have been furnished to
the Administrative Agent and such documents
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
11
and materials shall be reasonably
satisfactory in form and substance to the
Administrative Agent.
(k) All regulatory and third party approvals
and consents (including Hart-Scott-Rodino
and other approvals and consents, if any)
necessary in connection with the
Transactions and the financing contemplated
by the Amended and Restated Commitment
Letter shall have been obtained and be in
full force and effect and all applicable
waiting periods shall have expired without
any action being taken or threatened by any
competent authority which could restrain,
prevent or otherwise impose materially
adverse conditions on the Transactions or
the financing thereof, in each case on terms
satisfactory to the Administrative Agent.
(l) The Lenders shall have received (i)
audited consolidated financial statements of
Grupo Mexico, GMM and Grupo Ferroviario
Mexicano, S.A. de C.V. ("RR") for the two
most recent fiscal years (in the case of RR,
one year) ended prior to the Tender Closing
Date and (ii) unaudited interim consolidated
financial statements of Grupo Mexico and of
GMM for each quarterly period ended
subsequent to the date of the latest
financial statements delivered pursuant to
clause (i) of this paragraph (l) as to which
such financial statements are available.
(m) The requisite Lenders shall be satisfied
that upon making the initial A Tender Loans
the requirements of Regulation U of the
Board of Governors of the Federal Reserve
System shall have been complied with.
(n) The Lenders shall have received such
legal opinions (including opinions (i) from
counsel to Grupo Mexico and its subsidiaries
and (ii) from such special and
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
12
local counsel as may be required by the
Administrative Agent), documents and other
instruments as are customary for
transactions of this type or as they may
reasonably request.
(o) The negotiation, execution and delivery
of definitive Credit Documentation with
respect to the R/C Facilities satisfactory
to all parties. Such Credit Documentation
will contain a borrowing base condition to
each utilization of the R/C Facilities,
requiring that borrowings thereunder not
exceed 85% of the amount of eligible
receivables of Asarco securing the R/C
Loans; provided that if such requirement
renders the R/C Facilities initially
unutilizable by Asarco in an amount
sufficient to satisfy the financing needs of
Asarco on the Tender Closing Date, such
Credit Documentation will provide (until
such time as such borrowing base and
security requirement can be satisfied) for
an alternative mechanism (referred to herein
as the "ALTERNATIVE R/C FACILITIES") for
utilization by Asarco of the R/C Facilities,
with the following principal features
(borrowings under such alternative mechanism
being herein referred to as the "ALTERNATIVE
R/C LOANS"):
-- Alternative R/C Loans will not be secured
by Asarco assets
-- Alternative R/C Loans will be (i)
guaranteed by Asmex (until the Merger),
with such guarantee secured by the
Shares, and (ii) guaranteed by Grupo
Mexico, with such guarantee secured by
pledges of any Shares held by Grupo
Mexico and of the shares of GMM; and such
guarantee and pledges will not terminate
or be fully released (notwithstanding
contrary provisions elsewhere in this
Term Sheet) until
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
13
(in addition to other conditions noted
above) Asarco's senior unsecured
long-term indebtedness is rated at or
above BBB- by S&P and Baa3 by Moody's.
In the event that the working capital
requirements of Asarco may be satisfied with
Existing R/C Facilities subsequent to the
consummation of the Tender Offer, the
aggregate principal amount of the R/C
Facilities may be reduced by the amount of
such Existing R/C Facilities.
(p) Hedging arrangements satisfactory to the
Administrative Agent shall have been entered
into (with counterparties acceptable to the
Administrative Agent) for a "costless"
collar covering production of GMM (with a
minimum copper price of $0.75/lb with
respect to 70,000 tons per annum) and, upon
the consummation of the Tender Offer,
covering production of Asarco (with a
minimum copper price of $0.75/lb with
respect to 100,000 tons per annum), in each
case for a period of at least one year from
the Tender Closing Date.
On-Going Conditions: The making of each extension of credit shall
be conditioned on (a) the accuracy of all
representations and warranties in the Credit
Documentation (including, without
limitation, the material adverse change and
litigation representations) and (b) there
being no default or event of default in
existence at the time of, or after giving
effect to the making of, such extension of
credit.
As used herein and in the Credit
Documentation a "MATERIAL ADVERSE CHANGE"
shall mean (i) prior to the consummation of
the Merger, any event, development or
circumstance that has had or could
reasonably be expected to have a material
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
14
adverse effect on (a) the Transactions, (b)
the business, assets, property or condition
(financial or otherwise) of Grupo Mexico and
its subsidiaries, GMM and its subsidiaries,
or Asarco and its subsidiaries, in each case
taken as a whole (including any material
change, prior to consummation of the Tender
Offer, in capital structure or indebtedness
of Asarco and any material acquisition or
divestiture of assets of Asarco or any of
its subsidiaries taken as a whole, that in
any such case has had or could reasonably be
expected to have such a material adverse
effect); PROVIDED, HOWEVER, that any adverse
effect that copper prices have had or may
have on the business, operations, property
or financial condition of Grupo Mexico and
its subsidiaries, GMM and its subsidiaries,
or Asarco and its subsidiaries, in each case
taken as a whole, shall not be deemed to
have such a material adverse effect for
purposes of this clause (i)(b), or (c) the
validity or enforceability of any of the
Credit Documentation or the rights and
remedies of the Administrative Agent and the
Lenders thereunder; and (ii) after the
consummation of the Merger, any event,
development or circumstance that has had or
could reasonably be expected to have a
material adverse effect on (a) the
Transactions, (b) the business, assets,
property, condition (financial or otherwise)
or prospects of Grupo Mexico and its
subsidiaries, GMM and its subsidiaries, or
Asarco and its subsidiaries, in each case
taken as a whole, or (c) the validity or
enforceability of any of the Credit
Documentation or the rights and remedies of
the Administrative Agent and the Lenders
thereunder.
VI. CERTAIN DOCUMENTATION
MATTERS The Credit Documentation for the A Tender
Facility and the R/C Facilities shall
contain representations, warranties,
covenants and events of default customary
for financings of
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
15
these types and other terms deemed
appropriate by the Lenders, including,
without limitation (but subject in
appropriate cases to customary and other
exceptions to be agreed), those specified
below.
Representations and
Warranties: Financial statements (including pro forma
financial statements); absence of
undisclosed liabilities; no material adverse
change; corporate existence; compliance with
law; corporate power and authority;
enforceability of Credit Documentation; no
conflict with law or contractual
obligations; no material litigation; no
default; ownership of property; liens;
intellectual property; no burdensome
restrictions; taxes; margin stock
regulations; Federal Reserve regulations;
ERISA; Investment Company Act; subsidiaries;
environmental matters; solvency; labor
matters; accuracy of disclosure; and
creation and perfection of security
interests.
Affirmative Covenants: Delivery of financial statements, reports,
accountants' letters, annual projections,
officers' certificates and other information
requested by the Lenders; payment of certain
other obligations; all payments under the
Facilities to be made free and clear of and
without reduction by reason of present or
future taxes (customary gross-up, indemnity
and evidence of payment provisions);
continuation of business and maintenance of
existence and material rights and
privileges; compliance with laws and
material contractual obligations;
maintenance of property and insurance;
maintenance of books and records; right of
the Lenders to inspect property and books
and records; notices of defaults, litigation
and other material events; maintenance of
required hedging arrangements; compliance
with environmental laws; further assurances
(including, without limitation, with respect
to security interests in after-acquired
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
16
property); ownership of GMM, of RR, of Asmex
and, after the Merger, of Asarco; in the
event of Asarco's utilization of the
Alternative R/C Facility, Grupo Mexico to
use its best efforts to cause Asarco to
replace such utilization with R/C Loans that
are not Alternative R/C Loans; and Grupo
Mexico to use its best efforts to consummate
the Merger as soon as practicable; and GMM
to take reasonable steps to maintain
investment grade ratings from S&P, Moody's
and Duff & Phelps.
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
17
Financial Covenants: Financial covenants relating to
(a) Grupo Mexico (consolidated with all
subsidiaries, and consolidated with all
subsidiaries other than Southern Peru Copper
Corporation)
(i) Maximum Debt to EBITDA ratio
(ii) Minimum ratio of EBITDA to
interest expense
(iii) Maximum Debt to Capital
ratio
(b) GMM and subsidiaries (for so long as any
Grupo Mexico guarantee is in effect)
(i) Debt to Capital ratio not
exceeding 45%
(ii) Minimum Tangible Net Worth
(iii) Minimum Collections to
Debt Service ratio
(iv) Minimum annual level of
export receivables
(v) Minimum ratio of export
receivables to SEN debt service
(vi) Minimum ratio of EBITDA to
interest expense
(c) Asarco
Minimum EBITDA levels
Negative Covenants: Limitations on: indebtedness (including
preferred stock of subsidiaries); voluntary
prepayments of indebtedness other than under
the Facilities; liens (including negative
pledge on stock of GMM, Asarco and RR);
guarantee obligations; mergers,
consolidations, liquidations and
dissolutions; sales of assets; leases;
capital expenditures; investments, loans and
advances; dividends
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
18
and other payments in respect of capital
stock; transactions with affiliates; sale
and leasebacks; changes in fiscal year; and
changes in lines of business.
Special Covenant of Asmex: Asmex shall covenant that it will not engage
in any activity other than the Transactions,
the A Tender Facility and activities
necessary to effect the same.
Events of Default: (a) A Borrower shall fail to make any
payment of principal of any Loan when due.
(b) A Borrower shall fail to make any
payment of interest or fees on any Loan, or
any other payments required under the Credit
Documentation, within 3 business days of due
date.
(c) Any representation or warranty by a
Credit Party contained in the Credit
Documentation or any certificate required to
be delivered thereunder shall prove to have
been incorrect in a material respect when
made or deemed made.
(d) A Credit Party (or any of its
subsidiaries) shall fail to perform or
observe any of its financial or other
covenants under the Credit Documentation
(subject to grace periods to be agreed).
(e) Customary bankruptcy events of default,
including (i) Grupo Mexico, GMM, Asarco or
any of their subsidiaries (except for
non-material subsidiaries (to be defined))
shall consent to the appointment of a
receiver for itself or a substantial part of
its property, (ii) Grupo Mexico, GMM, Asarco
or any of their subsidiaries (except for
non-material subsidiaries) shall seek relief
under any applicable bankruptcy law or (iii)
an involuntary bankruptcy or like proceeding
shall have been commenced against Grupo
Mexico, GMM, Asarco or any of their
subsidiaries (except for non-material
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
19
subsidiaries) and such proceeding shall not
have been stayed or vacated for a period of
60 days after the date it was commenced.
(f) The security interest in any collateral
furnished by a Credit Party listed above
under "Guarantees and Collateral" shall
cease to be a first priority perfected
security interest as required hereunder.
(g) Failure by a Credit Party to pay when
due (after taking into account applicable
grace periods) any unsecured or secured
indebtedness (including capitalized lease
obligations) or any default that permits the
acceleration of the maturity of any such
indebtedness and obligations or termination
of any capital lease, aggregating in the
case of all such indebtedness and
obligations an amount equal to or exceeding
threshold amounts to be agreed.
(h) A final judgment or judgments for the
payment of money shall be entered against
Grupo Mexico, GMM, Asarco or any of their
subsidiaries (except for non-material
subsidiaries, and except, in the case of
Asarco and its subsidiaries prior to
consummation of the Tender Offer, judgments
the existence of which was already disclosed
and publicly available (or otherwise known
by officers of the Arranger or Chase working
on the Transactions) prior to September 24,
1999) in an aggregate amount for all such
persons equal to or exceeding threshold
amounts to be agreed and which have not been
bonded, stayed or satisfied for a period of
30 days or more.
(i) There shall occur one or more ERISA
Events which individually or in the
aggregate results in or could reasonably be
expected to result in a material adverse
change; or there shall exist an amount of
unfunded benefit liabilities (as defined in
the
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
20
Statement of Financial Accounting Standards
No. 87), individually or in the aggregate
for all Plans (excluding for purposes of
such computation any Plans with respect to
which assets exceed benefit liabilities),
which could reasonably be expected to result
in a material adverse change.
(j) There shall occur a change in control of
GMM, Asmex or (after the consummation of the
Tender Offer) Asarco; or Persons (to be
identified) controlling Grupo Mexico (I.E.,
having the power to elect a majority of the
members of the Board of Directors of Grupo
Mexico) on September 24, 1999, shall cease
to maintain such control.
(k) Default in the performance or
observation of any term or condition in any
material contract of Grupo Mexico, GMM or
Asarco, or any of their subsidiaries, in
each case taken as a whole, that could
reasonably be expected to result in a
material adverse change.
(l) So long as any obligations under the A
Tender Facility remain outstanding, any
Default or acceleration under the A Tender
Facility, or the R/C Facilities (including
Alternative R/C Facilities) or the secured
export note or other long-term debt
obligations of GMM (with a threshhold
amount, in the case of GMM, of $30 million).
Voting: Amendments and waivers with respect to the
Credit Documentation shall require the
approval of Lenders holding not less than a
majority of the aggregate amount of the
Loans thereunder and commitments under the
related Facilities, except that (a) the
consent of each Lender directly affected
thereby shall be required with respect to
(i) changes in the maturity of any Loan,
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
21
(ii) reductions in the rate of interest or
any fee or extensions of any due date
thereof, (iii) increases in the amount or
extensions of the expiry date of any
Lender's commitment and (iv) modifications
to the pro rata provisions of the Credit
Documentation and (b) the consent of 100% of
the Lenders shall be required with respect
to (i) modifications to any of the voting
percentages and (ii) releases of any
guarantee other than of a non-material
subsidiary (to be defined) or all or any
substantial part of the collateral.
Assignments and
Participations: The Lenders shall be permitted to assign and
sell participations in their Loans and
commitments, subject, in the case of
assignments (other than to another Lender or
to an affiliate of a Lender), to the consent
of the Administrative Agent and Grupo Mexico
(which consent in each case shall not be
unreasonably withheld, provided that if a
default shall have occurred and be
continuing Grupo Mexico's consent shall not
be necessary). In the case of partial
assignments (other than to another Lender or
to an affiliate of a Lender of any interest
in the A Tender Facility), the minimum
assignment amount shall be $5,000,000 unless
otherwise agreed by Grupo Mexico and the
Administrative Agent. Each assignment shall
be subject to payment to the Administrative
Agent of a processing fee of $3,500.
Participants shall have the same benefits as
the Lenders from which they acquired their
participations with respect to yield
protection and increased cost provisions.
Voting rights of participants shall be
limited to those matters with respect to
which the affirmative vote of the Lender
from which it purchased its participation
would be required as described in items (a)
and (b) of the paragraph on "Voting" above.
Pledges of Loans in accordance with
applicable law shall be permitted without
restriction.
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<PAGE>
22
Yield Protection: The Credit Documentation shall contain
customary provisions (a) protecting the
Lenders against increased costs or loss of
yield resulting from changes in reserve,
tax, capital adequacy and other requirements
of law and from the imposition of or changes
in withholding or other taxes and (b)
indemnifying the Lenders for "breakage
costs" incurred in connection with, among
other things, any prepayment of a Eurodollar
Loan (as defined in Annex I) on a day other
than the last day of an interest period with
respect thereto.
Expenses and
Indemnification: The Borrowers shall pay (a) all reasonable
out-of-pocket expenses of the Administrative
Agent and the Arranger associated with the
syndication of the Credit Facilities and the
preparation, execution, delivery and
administration of the Credit Documentation
and any amendment or waiver with respect
thereto (including the reasonable fees,
disbursements and other charges of counsel)
and (b) all out-of-pocket expenses of the
Administrative Agent and (after an Event of
Default) of the Lenders (including the fees,
disbursements and other charges of counsel)
in connection with the enforcement of the
Credit Documentation.
The Administrative Agent, the Arranger and
the Lenders (and their affiliates and their
respective officers, directors, employees,
advisors and agents) will have no liability
for, and will be indemnified and held
harmless against, any loss, liability, cost
or expense incurred in respect of the
financing contemplated hereby or the use or
the proposed use of proceeds thereof (except
to the extent resulting from the gross
negligence or willful misconduct of the
indemnified party).
Governing Law and Forum: State of New York.
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
23
Counsel to the
Administrative Agent
and the Arranger: Milbank, Tweed, Hadley & McCloy LLP, and
Ritch, Heather y Mueller S.C.
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[GRAPHIC OMITTED] Grupo Mexico, S.A. de C.V.
<PAGE>
Exhibit 99(b)(3)
[GRAPHIC OMITTED][GRAPHIC OMITTED]
THE CHASE MANHATTAN BANK CHASE SECURITIES INC.
270 Park Avenue 270 Park Avenue
New York, New York 10017 New York, New York 10017
October 7, 1999
ASMEX Corporation
Senior Secured Credit Facilities
Second Amended and Restated Commitment Letter
Grupo Mexico, S.A. de C.V.
Baja California 200
Colonia Roma Sur
Mexico, D.F. Mexico
06760
Attention: Daniel Tellechea
Ladies and Gentlemen:
This Second Amended and Restated Commitment Letter hereby,
subject to the terms and conditions set forth herein, amends and restates the
Amended and Restated Commitment Letter dated October 5, 1999 (the "AMENDED AND
RESTATED COMMITMENT"), among Grupo Mexico, Chase and CSI (each as defined
below). You have advised The Chase Manhattan Bank ("CHASE") and Chase Securities
Inc. ("CSI") that ASMEX Corporation, a Delaware corporation (the "BORROWER"), a
wholly-owned subsidiary of Grupo Mexico, S.A. de C.V., a Mexican corporation
("GRUPO MEXICO"), intends to make a cash tender offer (the "TENDER OFFER") for
common stock of Asarco Incorporated, a New Jersey corporation ("ASARCO"),
representing at least 80% of the ordinary voting power of all of the shares of
capital stock of Asarco on a fully diluted basis (including stock of Asarco
owned by Grupo Mexico and
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[GRAPHIC OMITTED] GRUPO MEXICO, S.A. DE C.V.
<PAGE>
2
subsidiaries prior to the Tender Offer), to be followed by the merger of the
Borrower into Asarco, with Asarco thereby becoming a wholly-owned subsidiary of
Grupo Mexico.
We understand that to provide funds for the Tender Offer and
to pay related fees and expenses, Grupo Mexico requires that senior secured
financing be made available to the Borrower in the amount of up to $823 million
(the "A TENDER FACILITY"). We further understand that, following the successful
completion of the Tender Offer, the Borrower is to be merged into Asarco with
Asarco thereby becoming a wholly-owned subsidiary of Grupo Mexico (the "MERGER"
and, together with the Tender Offer, the "TRANSACTIONS"), and that (whether or
not the Merger is immediately effected) Grupo Mexico will require senior
financing for Asarco (the "R/C FACILITIES") in an aggregate amount equal to $250
million in order to refinance certain indebtedness of Asarco and to provide
funds for ongoing general corporate purposes. The A Tender Facility and the R/C
Facilities are herein collectively referred to as the "FACILITIES".
In that connection, you have requested that CSI agree to
structure, arrange and syndicate the Facilities, and that Chase commit to
provide the entire principal amount of the Facilities and to serve as
administrative agent for the Facilities.
CSI is pleased to advise you that it is willing to act as
exclusive advisor, lead arranger and book manager for the Facilities.
Furthermore, Chase is pleased to advise you of its commitment
to provide the entire amount of the Facilities upon the terms and subject to the
conditions set forth or referred to in this second amended and restated
commitment letter (the "SECOND AMENDED AND RESTATED COMMITMENT LETTER"), in the
Second Amended and Restated Summary of Terms and Conditions attached hereto as
Exhibit A (the "TERM SHEET") and in the Fee Letter dated September 24, 1999 (the
"FEE LETTER"). We intend to syndicate the Facilities to a group of financial
institutions (together with Chase, the "LENDERS") identified by us in
consultation with you. Chase shall be relieved of its obligation to provide the
entire amount of the Facilities to the extent that the offers of Lenders other
than Chase to provide any portion of the Facilities are accepted.
CSI intends to commence syndication efforts promptly, and you
agree actively to assist CSI in its efforts to complete a syndication
satisfactory to it prior to the Tender Closing Date referred to in the Term
Sheet. Such assistance shall include (a) your using commercially reasonable
efforts to ensure that the syndication efforts benefit materially from your
existing lending relationships, (b) direct contact between senior management and
advisors of yourselves and the Borrower and the proposed Lenders, (c) assistance
in the preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication and (d) the hosting,
with CSI, of one or more meetings of prospective Lenders.
It is agreed that Chase will act as the sole and exclusive
Administrative Agent for the Facilities and as the Collateral Agent in
connection with the Facilities, and that CSI will act as the sole and exclusive
advisor, arranger and book manager for the Facilities, and each will, in such
capacities, perform the duties and exercise the authority customarily performed
and exercised by it in such roles. You agree that no other agents, co-agents,
arrangers or book managers will be appointed, no other titles will be awarded
and no compensation (other than that
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[GRAPHIC OMITTED] GRUPO MEXICO, S.A. DE C.V.
<PAGE>
3
expressly contemplated by the Term Sheet and the Fee Letter referred to below)
will be paid in connection with the Facilities unless you and we shall so agree.
CSI will (in consultation with you) manage all aspects of the
syndication, including decisions as to the selection of institutions to be
approached and when they will be approached, when their commitments will be
accepted, which institutions will participate, the allocations of the
commitments among the Lenders and the amount and distribution of fees among the
Lenders. To assist CSI in its syndication efforts, you agree promptly to prepare
and provide to CSI and Chase all information with respect to Grupo Mexico, Grupo
Minero Mexico, S.A. de C.V., a Mexican corporation ("GMM") , the Borrower and
their respective subsidiaries, the Transactions and the other matters
contemplated hereby, including all financial information and projections (the
"PROJECTIONS"), as we may reasonably request in connection with the arrangement
and syndication of the Facilities. You hereby represent and covenant that (a)
all information other than the Projections (the "INFORMATION") that has been or
will be made available to Chase or CSI by you or any of your representatives is
or will be, when furnished, complete and correct in all material respects and
does not or will not, when furnished, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
contained therein not materially misleading in light of the circumstances under
which such statements are made and (b) the Projections that have been or will be
made available to Chase or CSI by you or any of your representatives have been
or will be prepared in good faith based upon reasonable assumptions. You
understand that in arranging and syndicating the Facilities we may use and rely
on the Information and Projections without independent verification thereof.
As consideration for Chase's commitment hereunder and CSI's
agreement to perform the services described herein, you agree to pay and to
cause the Borrower to pay to Chase the non-refundable fees set forth in Annex I
to the Term Sheet and in the Fee Letter.
Chase's commitment hereunder and CSI's agreement to perform
the services described herein are subject to
(a) (i) there not occurring or becoming known to us any
material adverse condition or material adverse change in or affecting
the business, operations, property or financial condition of Grupo
Mexico and its subsidiaries, GMM and its subsidiaries, or Asarco and
its subsidiaries, in each case taken as a whole, which (in the case of
Asarco and its subsidiaries) is not already disclosed and publicly
available or otherwise known by any of our officers who is working with
you on the Transactions; provided, HOWEVER, that any adverse effect
that copper prices have had or may have on the business, operations,
property or financial condition of Grupo Mexico and its subsidiaries,
GMM and its subsidiaries, or Asarco and its subsidiaries, in each case
taken as a whole, shall not be deemed to be such a material adverse
condition or material adverse change for purposes of this clause
(a)(i); and (ii) our not becoming aware after September 24, 1999, of
any information or other matter affecting Grupo Mexico and its
subsidiaries, GMM and its subsidiaries, Asarco and its subsidiaries, in
each case taken as a whole, or the transactions contemplated hereby
which is inconsistent in a material and adverse manner
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[GRAPHIC OMITTED] GRUPO MEXICO, S.A. DE C.V.
<PAGE>
4
with any such information or other matter disclosed to us prior to
September 24, 1999, and which (in the case of Asarco and its
subsidiaries) is not already disclosed and publicly available or
otherwise known by any of our officers who is working with you on the
Transactions,
(b) there shall not have been any statute, rule, regulation,
judgment, order or injunction promulgated, entered, enforced, enacted,
issued or applicable to the Tender Offer or the Merger by any domestic
or foreign federal or state governmental regulatory or administrative
agency or authority or court or legislative body or commission which
(i) prohibits, or imposes any material limitations on, Grupo Mexico's
or Asmex' ownership or operation of all or a material portion of
Asarco's businesses or assets, (ii) prohibits, or makes illegal the
acceptance for payment, payment for or purchase of Asarco common stock
or the consummation of the Tender Offer or the Merger, (iii) results in
a material delay in or restricts the ability of Grupo Mexico, or
renders Grupo Mexico unable, to accept for payment, pay for or purchase
some or all of the tendered shares of Asarco common stock, or (iv)
imposes material limitations on the ability of Asmex or Grupo Mexico
effectively to exercise full rights of ownership of the Asarco common
stock, including, without limitation, the right to vote the Asarco
common stock purchased by it on all matters properly presented to
Asarco's shareholders,
(c) there not having occurred (i) after the date hereof to
November 30, 1999, a general banking moratorium established by Federal
or state authorities, a generally recognized capital markets crisis, as
evidenced by a cumulative 20% decline in the Dow Jones Industrial
Average over a period of five (5) consecutive trading days, or a
virtual cessation in bank and other private debt financings or the
introduction of additional material government restrictions imposed
upon lending institutions which materially affect the type of
transactions contemplated thereby, and (ii) after November 30, 1999, a
material disruption of or material adverse change in U.S. or developed
country financial, banking or capital market conditions that, in our
judgment, is reasonably likely to materially impair the syndication of
the Facilities,
(d) our satisfaction that prior to and during the syndication
of the Facilities there shall be no competing offering, placement or
arrangement of any debt securities or bank financing by or on behalf of
Grupo Mexico or any affiliate thereof,
(e) in the case of the A Tender Facility, our satisfaction
with the conditions of the Tender Offer which will include, in any
event (unless otherwise satisfied in connection with the definitive
Merger agreement with Asarco), (i) invalidation, redemption or other
inapplicability of the rights issued under Asarco's Shareholder Rights
Agreement dated as of January 28, 1998, as amended, (ii) invalidation
or satisfaction of the requirements of Article 7 of Asarco's Restated
Certificate of Incorporation with respect to the Transactions such that
following consummation of the Tender Offer the Merger may be
consummated without the affirmative vote of the holders of any Asarco
shares other than the Borrower, (iii) invalidity, inapplicability or
satisfaction (if necessary) of Article 10 of Asarco's Restated
Certificate of Incorporation with respect to the Transactions or the
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[GRAPHIC OMITTED] GRUPO MEXICO, S.A. DE C.V.
<PAGE>
5
Facilities, (iv) satisfaction or inapplicability of the requirements of
Section 14A:10A of the New Jersey Business Corporation Act with respect
to the Merger such that following consummation of the Tender Offer the
Merger may be consummated without the affirmative vote of the holders
of any Asarco shares other than the Borrower and (v) obtaining all
regulatory approvals and consents (including Hart-Scott-Rodino and
other approvals or consents, if any) necessary to effect the
Transactions,
(f) in the case of the R/C Facilities, prior or concurrent
disbursement of the A Tender Facility, successful consummation of the
Tender Offer and our satisfaction with the terms and conditions of the
definitive Merger agreement,
(g) the negotiation, execution and delivery on or prior to the
Tender Closing Date of definitive documentation with respect to the
Facilities satisfactory to all parties, and
(h) the other conditions set forth or referred to in the Term
Sheet.
The terms and conditions of Chase's commitments hereunder and of the Facilities
are not limited to those set forth herein and in the Term Sheet and Fee Letter.
Those matters that are not covered by the provisions hereof and of the Term
Sheet are subject to the approval and agreement of Chase, CSI and Grupo Mexico.
Notwithstanding the foregoing, the Term Sheet and Fee Letter are intended to
reflect all material closing conditions, representations and warranties,
covenants and events of default, subject however, in each case, to such
additional provisions as shall be appropriate to take into account developments
after September 24, 1999.
You agree (a) to indemnify and hold harmless Chase, CSI, their
affiliates and their respective officers, directors, employees, advisors, and
agents (each, an "INDEMNIFIED PERSON") from and against any and all losses,
claims, damages and liabilities to which any such indemnified person may become
subject arising out of or in connection with this Second Amended and Restated
Commitment Letter, the Facilities, the use of the proceeds thereof, the
Transactions or any related transaction or any claim, litigation, investigation
or proceeding relating to any of the foregoing, regardless of whether any
indemnified person is a party thereto, and to reimburse each indemnified person
upon demand for any legal or other expenses incurred in connection with
investigating or defending any of the foregoing, PROVIDED that the foregoing
indemnity will not, as to any indemnified person, apply to losses, claims,
damages, liabilities or related expenses to the extent they are found by a
final, non-appealable judgment of a court to arise from the willful misconduct
or gross negligence of such indemnified person, and (b) to reimburse Chase, CSI
and their affiliates on demand for all reasonable and documented out-of-pocket
expenses (including due diligence expenses, syndication expenses, consultant's
fees and expenses, travel expenses, and reasonable fees, charges and
disbursements of counsel) incurred in connection with the Facilities and any
related documentation (including this Second Amended and Restated Commitment
Letter, the Term Sheet, the Fee Letter and the definitive financing
documentation) or (without duplication of fees or costs for administrative
services covered in the Fee Letter) the administration, amendment, modification
or waiver thereof. No indemnified person shall be liable for any damages arising
from the use by others of Information or other materials obtained through
electronic, telecommunications or other information transmission
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[GRAPHIC OMITTED] GRUPO MEXICO, S.A. DE C.V.
<PAGE>
6
systems, or for any special, indirect, consequential or punitive damages in
connection with the Facilities.
You acknowledge that Chase and/or CSI may be providing debt
financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described hereby and otherwise. Neither
Chase nor CSI will use confidential information obtained from you by virtue of
the transactions contemplated hereby or other relationships with you in
connection with the performance by Chase or CSI of services for other companies,
and neither Chase nor CSI will furnish any such information to other companies.
You also acknowledge that neither Chase nor CSI has any obligation to use in
connection with the transactions contemplated hereby, or to furnish to you,
confidential information obtained from other companies.
This Second Amended and Restated Commitment Letter shall not
be assignable by you without the prior written consent of Chase and CSI (and any
purported assignment without such consent shall be null and void), is intended
to be solely for the benefit of the parties hereto and is not intended to confer
any benefits upon, or create any rights in favor of, any person other than the
parties hereto. This Second Amended and Restated Commitment Letter may not be
amended or waived except by an instrument in writing signed by you, Chase and
CSI. This Second Amended and Restated Commitment Letter may be executed in any
number of counterparts, each of which shall be an original, and all of which,
when taken together, shall constitute one agreement. Delivery of an executed
signature page of this Second Amended and Restated Commitment Letter by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. This Second Amended and Restated Commitment Letter and the
Fee Letter set forth the entire understanding of the parties with respect
thereto. This Second Amended and Restated Commitment Letter shall be governed
by, and construed in accordance with, the laws of the State of New York.
This Second Amended and Restated Commitment Letter is
delivered to you on the understanding that neither this Second Amended and
Restated Commitment Letter, the Term Sheet or the Fee Letter nor any of their
terms or substance shall be disclosed, directly or indirectly, to any other
person except (a) to your officers, agents and advisors who are directly
involved in the consideration of this matter or (b) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law (in which
case you agree to inform us promptly thereof), PROVIDED, that the foregoing
restrictions shall cease to apply (except in respect of the Fee Letter and its
terms and substance) after this Second Amended and Restated Commitment Letter
has been accepted by you.
The compensation, reimbursement, indemnification and
confidentiality provisions contained herein and in the Fee Letter shall remain
in full force and effect regardless of whether definitive financing
documentation shall be executed and delivered and notwithstanding the
termination of this Second Amended and Restated Commitment Letter or Chase's
commitments hereunder.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof and of the Term Sheet by returning
to us executed counterparts
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<PAGE>
7
hereof not later than 11:00 a.m., New York City time, on October 7, 1999 (at
which time this Second Amended and Restated Commitment Letter shall expire if
not executed and delivered by you). Further, this Second Amended and Restated
Commitment Letter and the amendments of the Amended and Restated Commitment and
the Summary of Terms and Conditions attached thereto as Exhibit A set forth
herein and in the Term Sheet shall not become effective UNLESS Grupo Mexico and
Asarco execute and deliver a definitive Merger agreement satisfactory to Chase
and CSI, not later than 5:00 p.m., New York City time, on October 15, 1999.
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<PAGE>
8
Chase and CSI are pleased to have been given the opportunity
to assist you in connection with this important financing.
Upon the effectiveness of this Second Amended and Restated
Commitment Letter, references in the Fee Letter to the "Commitment Letter"
(other than the reference thereto in clause (i) of the second paragraph of the
Fee Letter) shall mean the Amended and Restated Commitment, as amended and
restated hereby. Except as set forth in the preceding sentence, the Fee Letter
shall remain unmodified and in full force and effect.
Very truly yours,
THE CHASE MANHATTAN BANK
By: /s/ Robert Anastasio
------------------------------------
Name: Robert Anastasio
Title: Vice President
CHASE SECURITIES INC.
By: /s/ Anne S. Wallace
\ ------------------------------------
Name: Anne S. Wallace
Title: Vice President
Accepted and agreed to as of the date first written above by:
GRUPO MEXICO, S.A. DE C.V.
By: /s/ Daniel Tellechea Salido
----------------------------------
Name: Daniel Tellechea Salido
Title: Managing Director For
Administration and Finance
By: /s/ Genaro Guerrero Diaz Mercado
------------------------------------
Name: Genaro Guerrero Diaz Mercado
Title: Treasurer
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<PAGE>
Exhibit A
SENIOR SECURED CREDIT FACILITIES
Second Amended and Restated Summary of Terms and Conditions
October 7, 1999
AS USED HEREIN, CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN
SHALL HAVE THE RESPECTIVE MEANINGS ASCRIBED TO THEM IN THE SECOND AMENDED AND
RESTATED COMMITMENT LETTER TO WHICH THIS SECOND AMENDED AND RESTATED SUMMARY OF
TERMS AND CONDITIONS IS ATTACHED.
This Second Amended and Restated Summary of Terms and
Conditions hereby, subject to the terms and conditions set forth in the Amended
and Restated Commitment Letter, amends and restates the Amended and Restated
Summary of Terms and Conditions dated October 5, 1999. The following sets forth
the terms and conditions for the senior secured credit facilities that will be
made available to ASMEX Corporation, a Delaware corporation ("ASMEX"), in
connection with Asmex' proposed cash tender offer (the "TENDER OFFER" and,
together with the Merger defined below, the "TRANSACTIONS") for shares of common
stock of Asarco Incorporated (the "Shares"), a New Jersey corporation
("ASARCO"), representing not less than 80% of the ordinary voting power of all
of the shares of capital stock of Asarco on a fully diluted basis, including
stock of Asarco owned by Grupo Mexico, S.A. de C.V., ("GRUPO MEXICO") and
subsidiaries prior to the Tender Offer (determined in a manner satisfactory to
the Arranger). The conditions precedent to the obligation of Asmex to purchase
the Shares pursuant to the Tender Offer will include, unless otherwise satisfied
in connection with the definitive Merger agreement with Asarco, the following:
(i) invalidation, redemption or other inapplicability of the rights issued under
Asarco's Shareholder Rights Agreement dated as of January 28, 1998, as amended,
(ii) invalidation or satisfaction of the requirements of Article 7 of Asarco's
Restated Certificate of Incorporation with respect to the Transactions such
that, following consummation of the Tender Offer, the Merger can be consummated
without the affirmative vote of the holders of any Asarco shares other than
Asmex, (iii) invalidity, inapplicability or satisfaction (if necessary) of
Article 10 of Asarco's Restated Certificate of Incorporation with respect to the
Transactions or the Facilities, (iv) satisfaction or inapplicability of the
requirements of Section 14A:10A of the New Jersey Business Corporation Act with
respect to the Merger such that following consummation of the Tender Offer the
Merger can be consummated without the affirmative vote of the holders of any
Asarco shares other than Asmex and (v) obtaining all regulatory approvals and
consents (including Hart-Scott-Rodino, and other approvals or consents, if any)
necessary to effect the Transactions. The purchase of shares will be funded
through credit facilities (the "A Tender Facility" referred to below) together
with certain cash from Grupo Minero Mexico, S.A. de C.V. ("GMM") and Grupo
Mexico. Following the purchase of the Shares pursuant to the Tender Offer,
Asmex, a direct wholly-owned subsidiary of Grupo Mexico, is to be merged into
Asarco with Asarco thereby becoming a wholly-owned subsidiary of Grupo Mexico
and with Asarco shareholders receiving solely cash consideration (the "MERGER").
The following also sets forth the terms and conditions for the other senior
credit facilities (the "R/C Facilities" referred to
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<PAGE>
2
below) that will be made available to Asarco upon and subsequent to consummation
of the Tender Offer.
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<PAGE>
3
I. PARTIES
Borrowers: Under the A Tender Facility, ASMEX
Corporation ("ASMEX") and, after the
Merger, Asarco; and under the R/C
Facilities, Asarco (each of Asmex and
Asarco being sometimes referred to below
as a "BORROWER").
Guarantor(s): Under the A Tender Facility, Grupo
Mexico; and under the R/C Facilities,
Grupo Mexico and, until consummation of
the Merger, Asmex.
Advisor, Lead Arranger
and Book Manager: Chase Securities Inc. (in such capacity,
the "ARRANGER").
Administrative Agent: The Chase Manhattan Bank ("CHASE" and,
in such capacity, the "ADMINISTRATIVE
AGENT").
Lenders: A syndicate of banks, financial
institutions and other entities,
including Chase, arranged by the
Arranger in consultation with Grupo
Mexico (collectively, the "LENDERS").
II. TYPES AND AMOUNTS OF
CREDIT FACILITIES
1. A TENDER FACILITY
Type and Amount of
Facility: An aggregate principal amount of up to
$823 million will be available to Asmex
under a senior secured credit facility
(the "A TENDER FACILITY").
Availability: The Loans under the A Tender Facility
(the "A TENDER LOANS") shall be made in
a single drawing on the Tender Closing
Date (as defined below); provided that
in the event of tender of less than 100%
of the Shares of Asarco (other than
those owned by Grupo Mexico and
subsidiaries) in the Tender Offer, the
unused portion of the commitments under
the A Tender Facility
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<PAGE>
4
will be reserved for drawing on the
Merger closing date for payment for the
remaining Shares of Asarco.
Amortization: The A Tender Loans shall be repayable in
full on the date eighteen (18) months
after the Tender Closing Date (the date
on which the A Tender Loans are
repayable, the "MATURITY DATE").
Purpose: The proceeds of the A Tender Loans shall
be used to purchase Shares.
2. R/C FACILITIES
Type and Amount of
Facility: An aggregate principal amount of up to
$250 million will be available to Asarco
subsequent to consummation of the Tender
Offer under a senior secured revolving
credit facility (the "R/C FACILITIES").
Such aggregate principal amount may,
based on the actual amount of eligible
accounts receivable of Asarco available
to secure the R/C Facilities and in the
sole discretion of the Arranger, be
increased provided that the A Tender
Loans are prepaid in an amount equal to
the amount of such increase. Such
aggregate principal amount may, based on
the aggregate principal amount of
Existing R/C Facilities (as defined
below) available to Asarco and remaining
in place subsequent to the consummation
of the Tender Offer, be reduced in an
amount equal to the amount of such
Existing R/C Facilities.
Availability: The Loans under the R/C Facilities (the
"R/C LOANS" and together with the A
Tender Loans, the "LOANS") shall be
available for borrowing, repayment and
reborrowing during the period from the
Tender Closing Date to the date
thirty-three (33) months thereafter.
Termination: The R/C Facilities shall terminate, and
all outstanding R/C Loans shall be
repayable in
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<PAGE>
5
full, on the date three (3) years after
the Tender Closing Date.
Purpose: The proceeds of the R/C Loans shall be
used (i) to refinance outstanding
indebtedness of Asarco under the
Existing R/C Facilities (as defined
below) and in the event of an increase
in the amount of the R/C Facilities
above $250 million to repay a portion of
outstanding A Tender Loans and (ii) for
working capital purposes of Asarco. The
"EXISTING R/C FACILITIES" means the
credit facilities identified as such by
Grupo Mexico and the Administrative
Agent and which are on terms reasonably
acceptable to the Arranger and Grupo
Mexico. The aggregate principal amount
of the Existing R/C Facilities is
believed to total $800 million and to be
for working capital purposes (based on
publicly available information).
III. CERTAIN PAYMENT PROVISIONS
Fees and Interest Rates: As set forth on Annex I.
Optional Prepayments
and Commitment Reductions: All or a portion of the Loans may be
prepaid at any time and the unutilized
portion of the Facilities may be
terminated in whole or in part (in
minimum amounts to be agreed upon) at
the respective Borrower's option
(except, in the case of the R/C
Facilities prior to the Tender Closing
Date, at the option of Grupo Mexico). A
Tender Loans once prepaid may not be
reborrowed.
Mandatory Prepayments and
Commitment Reductions: The A Tender Loans will be prepaid,
undrawn commitments for A Tender Loans
will be reduced and replaced, and R/C
Loans will be prepaid, in that order, to
the extent of the net cash proceeds
received from the following (in each
case subject to customary exclusions to
be agreed):
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<PAGE>
6
-- any asset sales by Asarco and
designated subsidiaries
-- any debt issuances by Asarco
(other than R/C Loans, except
for R/C Loans required to
reduce the A Tender Facility)
-- any equity issuances by Asmex
or Asarco (to any party other
than Asmex or Grupo Mexico)
-- any sale of Asarco stock
-- any proceeds received by
Asarco as a result of the
exercise (by holders) of
warrants relating to shares of
Grupo Mexico held in a trust
for the benefit of Asarco
IV. GUARANTEES AND COLLATERAL
Guarantees: (a) All obligations of Asmex (and, after
the Merger, of Asarco) in respect of the
A Tender Facility will be
unconditionally guaranteed by Grupo
Mexico.
(b) All obligations of Asarco in respect
of the R/C Facilities will be
unconditionally guaranteed by Grupo
Mexico until the A Tender Loans are
repaid in full (except as otherwise
noted below in the case of Alternative
R/C Facilities, and provided the
conditions for release of the collateral
for such guarantee obligations have been
met), and by Asmex until consummation of
the Merger.
The Borrowers and guarantors are
collectively referred to herein as
"CREDIT PARTIES."
Collateral: (a) The obligations of Asmex in respect
of the Facilities will be secured by a
perfected first priority security
interest in the Shares at any time owned
by it.
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<PAGE>
7
(b) The obligations of Grupo Mexico
under its guarantees of the A Tender
Facility and the R/C Facilities will be
secured by a perfected first priority
security interest in (1) shares of GMM
representing 100% of the outstanding
shares of GMM (other than shares not
exceeding 1.50% held by others) and (2)
all shares of Asarco held by Grupo
Mexico, both immediately prior to the
making of the A Tender Loans (presently
representing approximately 9.8% of the
outstanding shares of Asarco) and after
the Merger. In addition, Grupo Mexico
will covenant to maintain at all times,
in support of its guarantees (so long as
they remain in effect), an amount of
unencumbered cash and short-term
authorized money market investments (to
be agreed with the Arranger, including
deposits with approved banks, which in
Mexico shall include only Banamex and
Bancomer) equal to the lower of (A) 6
months of interest on the outstanding A
Tender Loans and (B) $100 million.
(c) The obligations of Asarco in respect
of the R/C Facilities will be secured by
accounts receivable of Asarco (except as
otherwise provided below in the case of
"Alternative R/C Facilities").
The security documentation will provide
that in the event of default and
enforcement or foreclosure at a time
when both Asarco shares and GMM shares
are held as collateral for the defaulted
obligation, the collateral agent will be
instructed to exercise reasonable
efforts (for a period of up to 45 days)
to sell collateral consisting of Asarco
shares before selling collateral
consisting of GMM shares.
Certain Releases of Collateral: So long as no Default has occurred and
is continuing:
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<PAGE>
8
(a) The pledge of Asarco Shares securing
guarantees of the R/C Loans will
terminate when the A Tender Loans are
repaid in full, PROVIDED that at such
time (i) the R/C Loans and R/C
Facilities are not Alternative R/C Loans
and Alternative R/C Facilities, and (ii)
Asarco is in compliance with its
financial covenant relating to minimum
EBITDA;
(b) The pledge of Asarco Shares securing
guarantees of the Alternative R/C Loans
will terminate when (i) the A Tender
Loans are repaid in full, and (ii)
Asarco's senior unsecured long-term
indebtedness is rated at or above BBB-
by S&P and Baa3 by Moody's;
(c) The pledge of GMM shares securing
Grupo Mexico guarantees of the
Facilities will be reduced pro rata (on
a percentage basis) with reductions (by
repayment) of the outstanding principal
of the A Tender Loans, PROVIDED that
(except as described in clause (d)
below) the percentage of outstanding GMM
shares remaining in pledge as security
for guarantees of the Facilities may not
thereby be reduced below 51% (or such
higher percentage, if any, as is
required for approval of corporate
actions of GMM that are subject to
shareholder consent and for election of
a majority of the Board of Directors of
GMM);
(d) At such time as the outstanding
principal of the A Tender Loans has been
reduced (by repayment) to an amount
equal to or less than 25% of the
original principal amount of the A
Tender Loans, all GMM shares remaining
in pledge as security for guarantees of
the Facilities will be released,
PROVIDED that Asarco's senior unsecured
long-term indebtedness is rated at or
above BBB- by S&P and Baa3 by Moody's.
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<PAGE>
9
V. CERTAIN CONDITIONS The availability of the Facilities shall
be conditioned upon satisfaction of,
among other things, the following
conditions precedent (the date upon
which all such conditions precedent
shall be satisfied and the A Tender
Facility is first utilized being herein
called the "TENDER CLOSING DATE") and
the occurrence of the first utilization
of the A Tender Facility on or before
the date nine (9) months after September
24, 1999, and other conditions precedent
customary for facilities and
transactions of this type, including
evidence of authority and receipt of
necessary consents and approvals:
(a) Each Credit Party shall have
executed and delivered satisfactory
definitive financing documentation with
respect to the Facilities (the "CREDIT
DOCUMENTATION").
(b) On or prior to the Tender Closing
Date, cash in an amount not less than
$270 million shall be contributed to the
equity capital of Asmex through Grupo
Mexico (i) from existing cash resources
of GMM in an aggregate amount not less
than $250 million, and (ii) from
existing cash resources of Grupo Mexico,
in an amount not less than $20 million;
PROVIDED that in the event that Asmex
requires cash in excess of such cash
contributions and the A Tender Facility
to consummate the Tender Offer, such
additional cash shall be provided to
Asmex through Grupo Mexico from other
sources acceptable to the Arranger.
(c) Satisfaction of the Arranger with
all material terms and conditions of the
Tender Offer and the definitive Merger
agreement. In addition, the Tender Offer
and the Merger shall have been, or shall
be concurrently, consummated in a manner
satisfactory to the Administrative Agent
(including satisfaction of the
Administrative Agent with all
determinations as to the satisfaction of
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<PAGE>
10
material conditions thereunder) and no
such condition of the Tender Offer or
the definitive Merger agreement shall
have been waived, amended, supplemented
or otherwise modified without the prior
written consent of the Administrative
Agent; and Asmex shall have acquired
shares of common stock of Asarco
representing not less than 80% of the
ordinary voting power of all of the
shares of capital stock of Asarco on a
fully diluted basis, including stock of
Asarco owned by Grupo Mexico and
subsidiaries prior to the Tender Offer
(determined in a manner satisfactory to
the Arranger).
(d) Grupo Mexico and Asarco shall have
entered into a definitive Merger
agreement in form and substance
satisfactory to the Administrative
Agent, or Grupo Mexico shall have made
satisfactory arrangements for the
initiation of a statutory short-form
merger, in each case pursuant to which
Asarco will become a wholly-owned
subsidiary of Grupo Mexico with Grupo
Mexico able to exercise full control
over the business and affairs of Asarco.
(e) Invalidation or satisfaction of the
requirements of Article 7 of Asarco's
Restated Certificate of Incorporation
with respect to the Transactions such
that, following consummation of the
Tender Offer, the Merger can be
consummated without the affirmative vote
of the holders of any Asarco shares
other than Asmex; and invalidity,
inapplicability or satisfaction (if
necessary) of Article 10 of Asarco's
Restated Certificate of Incorporation
with respect to the Transactions or the
Facilities.
(f) Satisfaction or inapplicability of
the requirements of Section 14A:10A of
the New Jersey Business Corporation Act
with respect to the Merger such that
following
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<PAGE>
11
consummation of the Tender Offer the
Merger can be consummated without the
affirmative vote of the holders of any
Asarco shares other than Asmex.
(g) Invalidation, redemption or other
inapplicability of the rights issued
under Asarco's Shareholder Rights
Agreement dated as of January 28, 1998,
as amended.
(h) There not being any statute, rule,
regulation, judgment, order or
injunction promulgated, entered,
enforced, enacted, issued or applicable
to the Tender Offer or the Merger by any
domestic or foreign federal or state
governmental regulatory or
administrative agency or authority or
court or legislative body or commission
which (i) prohibits, or imposes any
material limitations on, Grupo Mexico's
or Asmex' ownership or operation of all
or a material portion of Asarco's
businesses or assets, (ii) prohibits, or
makes illegal the acceptance for
payment, payment for or purchase of
Asarco common stock or the consummation
of the Tender Offer or the Merger, (iii)
results in a material delay in or
restricts the ability of the Grupo
Mexico, or renders Grupo Mexico unable,
to accept for payment, pay for or
purchase some or all of the tendered
shares of Asarco common stock, or (iv)
imposes material limitations on the
ability of Asmex or Grupo Mexico
effectively to exercise full rights of
ownership of the Asarco common stock,
including, without limitation, the right
to vote the Asarco common stock
purchased by it on all matters properly
presented to Asarco's shareholders.
(i) The Lenders, the Administrative
Agent and the Arranger shall have
received all fees required to be paid,
and all expenses for which invoices have
been presented, on or before the Tender
Closing Date.
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12
(j) The documents and materials filed
publicly by Grupo Mexico (and its
affiliates) and Asmex in connection with
the Tender Offer shall have been
furnished to the Administrative Agent
and such documents and materials shall
be reasonably satisfactory in form and
substance to the Administrative Agent.
(k) All regulatory and third party
approvals and consents (including
Hart-Scott-Rodino and other approvals
and consents, if any) necessary in
connection with the Transactions and the
financing contemplated by the Second
Amended and Restated Commitment Letter
shall have been obtained and be in full
force and effect and all applicable
waiting periods shall have expired
without any action being taken or
threatened by any competent authority
which could restrain, prevent or
otherwise impose materially adverse
conditions on the Transactions or the
financing thereof, in each case on terms
satisfactory to the Administrative
Agent.
(l) The Lenders shall have received (i)
audited consolidated financial
statements of Grupo Mexico, GMM and
Grupo Ferroviario Mexicano, S.A. de C.V.
("RR") for the two most recent fiscal
years (in the case of RR, one year)
ended prior to the Tender Closing Date
and (ii) unaudited interim consolidated
financial statements of Grupo Mexico and
of GMM for each quarterly period ended
subsequent to the date of the latest
financial statements delivered pursuant
to clause (i) of this paragraph (l) as
to which such financial statements are
available.
(m) The requisite Lenders shall be
satisfied that upon making the initial A
Tender Loans the requirements of
Regulation U of the
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<PAGE>
13
Board of Governors of the Federal
Reserve System shall have been complied
with.
(n) The Lenders shall have received such
legal opinions (including opinions (i)
from counsel to Grupo Mexico and its
subsidiaries and (ii) from such special
and local counsel as may be required by
the Administrative Agent), documents and
other instruments as are customary for
transactions of this type or as they may
reasonably request.
(o) The negotiation, execution and
delivery of definitive Credit
Documentation with respect to the R/C
Facilities satisfactory to all parties.
Such Credit Documentation will contain a
borrowing base condition to each
utilization of the R/C Facilities,
requiring that borrowings thereunder not
exceed 85% of the amount of eligible
receivables of Asarco securing the R/C
Loans; provided that if such requirement
renders the R/C Facilities initially
unutilizable by Asarco in an amount
sufficient to satisfy the financing
needs of Asarco on the Tender Closing
Date, such Credit Documentation will
provide (until such time as such
borrowing base and security requirement
can be satisfied) for an alternative
mechanism (referred to herein as the
"ALTERNATIVE R/C FACILITIES") for
utilization by Asarco of the R/C
Facilities, with the following principal
features (borrowings under such
alternative mechanism being herein
referred to as the "ALTERNATIVE R/C
LOANS"):
-- Alternative R/C Loans will not
be secured by Asarco assets
-- Alternative R/C Loans will be
(i) guaranteed by Asmex (until
the Merger), with such
guarantee secured by the
Shares, and (ii) guaranteed by
Grupo Mexico,
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<PAGE>
14
with such guarantee secured by
pledges of any Shares held by
Grupo Mexico and of the shares
of GMM; and such guarantee and
pledges will not terminate or
be fully released
(notwithstanding contrary
provisions elsewhere in this
Term Sheet) until (in addition
to other conditions noted
above) Asarco's senior
unsecured long-term
indebtedness is rated at or
above BBB- by S&P and Baa3 by
Moody's.
In the event that the working capital
requirements of Asarco may be satisfied
with Existing R/C Facilities subsequent
to the consummation of the Tender Offer,
the aggregate principal amount of the
R/C Facilities may be reduced by the
amount of such Existing R/C Facilities.
(p) Hedging arrangements satisfactory to
the Administrative Agent shall have been
entered into (with counterparties
acceptable to the Administrative Agent)
for a "costless" collar covering
production of GMM (with a minimum copper
price of $0.75/lb with respect to 70,000
tons per annum) and, upon the
consummation of the Tender Offer,
covering production of Asarco (with a
minimum copper price of $0.75/lb with
respect to 100,000 tons per annum), in
each case for a period of at least one
year from the Tender Closing Date.
On-Going Conditions: The making of each extension of credit
shall be conditioned on (a) the accuracy
of all representations and warranties in
the Credit Documentation (including,
without limitation, the material adverse
change and litigation representations)
and (b) there being no default or event
of default in existence at the time of,
or after giving effect to the making of,
such extension of credit.
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15
As used herein and in the Credit
Documentation a "MATERIAL ADVERSE
CHANGE" shall mean (i) prior to the
consummation of the Merger, any event,
development or circumstance that has had
or could reasonably be expected to have
a material adverse effect on (a) the
Transactions, (b) the business, assets,
property or condition (financial or
otherwise) of Grupo Mexico and its
subsidiaries, GMM and its subsidiaries,
or Asarco and its subsidiaries, in each
case taken as a whole (including any
material change, prior to consummation
of the Tender Offer, in capital
structure or indebtedness of Asarco and
any material acquisition or divestiture
of assets of Asarco or any of its
subsidiaries taken as a whole, that in
any such case has had or could
reasonably be expected to have such a
material adverse effect); PROVIDED,
HOWEVER, that any adverse effect that
copper prices have had or may have on
the business, operations, property or
financial condition of Grupo Mexico and
its subsidiaries, GMM and its
subsidiaries, or Asarco and its
subsidiaries, in each case taken as a
whole, shall not be deemed to have such
a material adverse effect for purposes
of this clause (i)(b), or (c) the
validity or enforceability of any of the
Credit Documentation or the rights and
remedies of the Administrative Agent and
the Lenders thereunder; and (ii) after
the consummation of the Merger, any
event, development or circumstance that
has had or could reasonably be expected
to have a material adverse effect on (a)
the Transactions, (b) the business,
assets, property, condition (financial
or otherwise) or prospects of Grupo
Mexico and its subsidiaries, GMM and its
subsidiaries, or Asarco and its
subsidiaries, in each case taken as a
whole, or (c) the validity or
enforceability of any of the Credit
Documentation or the rights and remedies
of
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16
the Administrative Agent and the Lenders
thereunder.
VI. CERTAIN DOCUMENTATION MATTERS The Credit Documentation for the A
Tender Facility and the R/C Facilities
shall contain representations,
warranties, covenants and events of
default customary for financings of
these types and other terms deemed
appropriate by the Lenders, including,
without limitation (but subject in
appropriate cases to customary and other
exceptions to be agreed), those
specified below.
Representations and Warranties: Financial statements (including pro
forma financial statements); absence of
undisclosed liabilities; no material
adverse change; corporate existence;
compliance with law; corporate power and
authority; enforceability of Credit
Documentation; no conflict with law or
contractual obligations; no material
litigation; no default; ownership of
property; liens; intellectual property;
no burdensome restrictions; taxes;
margin stock regulations; Federal
Reserve regulations; ERISA; Investment
Company Act; subsidiaries; environmental
matters; solvency; labor matters;
accuracy of disclosure; and creation and
perfection of security interests.
Affirmative Covenants: Delivery of financial statements,
reports, accountants' letters, annual
projections, officers' certificates and
other information requested by the
Lenders; payment of certain other
obligations; all payments under the
Facilities to be made free and clear of
and without reduction by reason of
present or future taxes (customary
gross-up, indemnity and evidence of
payment provisions); continuation of
business and maintenance of existence
and material rights and privileges;
compliance with laws and material
contractual obligations; maintenance of
property and insurance; maintenance of
books and records; right of
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17
the Lenders to inspect property and
books and records; notices of defaults,
litigation and other material events;
maintenance of required hedging
arrangements; compliance with
environmental laws; further assurances
(including, without limitation, with
respect to security interests in
after-acquired property); ownership of
GMM, of RR, of Asmex and, after the
Merger, of Asarco; in the event of
Asarco's utilization of the Alternative
R/C Facility, Grupo Mexico to use its
best efforts to cause Asarco to replace
such utilization with R/C Loans that are
not Alternative R/C Loans; and Grupo
Mexico to use its best efforts to
consummate the Merger as soon as
practicable; and GMM to take reasonable
steps to maintain investment grade
ratings from S&P, Moody's and Duff &
Phelps.
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Financial Covenants: Financial covenants relating to
(a) Grupo Mexico (consolidated with all
subsidiaries, and consolidated with all
subsidiaries other than Southern Peru
Copper Corporation)
(i) Maximum Debt to EBITDA ratio
(ii) Minimum ratio of EBITDA to
interest expense
(iii) Maximum Debt to Capital
ratio
(b) GMM and subsidiaries (for so long as
any Grupo Mexico guarantee is in effect)
(i) Debt to Capital ratio not
exceeding 45%
(ii) Minimum Tangible Net Worth
(iii) Minimum Collections to
Debt Service ratio
(iv) Minimum annual level of
export receivables
(v) Minimum ratio of export
receivables to SEN debt service
(vi) Minimum ratio of EBITDA to
interest expense
(c) Asarco
Minimum EBITDA levels
Negative Covenants: Limitations on: indebtedness (including
preferred stock of subsidiaries);
voluntary prepayments of indebtedness
other than under the Facilities; liens
(including negative pledge on stock of
GMM, Asarco and RR); guarantee
obligations; mergers, consolidations,
liquidations and dissolutions; sales of
assets; leases; capital expenditures;
investments, loans and advances;
dividends
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19
and other payments in respect of capital
stock; transactions with affiliates;
sale and leasebacks; changes in fiscal
year; and changes in lines of business.
Special Covenant of Asmex: Asmex shall covenant that it will not
engage in any activity other than the
Transactions, the A Tender Facility and
activities necessary to effect the same.
Events of Default: (a) A Borrower shall fail to make any
payment of principal of any Loan when
due.
(b) A Borrower shall fail to make any
payment of interest or fees on any Loan,
or any other payments required under the
Credit Documentation, within 3 business
days of due date.
(c) Any representation or warranty by a
Credit Party contained in the Credit
Documentation or any certificate
required to be delivered thereunder
shall prove to have been incorrect in a
material respect when made or deemed
made.
(d) A Credit Party (or any of its
subsidiaries) shall fail to perform or
observe any of its financial or other
covenants under the Credit Documentation
(subject to grace periods to be agreed).
(e) Customary bankruptcy events of
default, including (i) Grupo Mexico,
GMM, Asarco or any of their subsidiaries
(except for non-material subsidiaries
(to be defined)) shall consent to the
appointment of a receiver for itself or
a substantial part of its property, (ii)
Grupo Mexico, GMM, Asarco or any of
their subsidiaries (except for
non-material subsidiaries) shall seek
relief under any applicable bankruptcy
law or (iii) an involuntary bankruptcy
or like proceeding shall have been
commenced against Grupo Mexico, GMM,
Asarco or any of their subsidiaries
(except for non-material
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<PAGE>
20
subsidiaries) and such proceeding shall
not have been stayed or vacated for a
period of 60 days after the date it was
commenced.
(f) The security interest in any
collateral furnished by a Credit Party
listed above under "Guarantees and
Collateral" shall cease to be a first
priority perfected security interest as
required hereunder.
(g) Failure by a Credit Party to pay
when due (after taking into account
applicable grace periods) any unsecured
or secured indebtedness (including
capitalized lease obligations) or any
default that permits the acceleration of
the maturity of any such indebtedness
and obligations or termination of any
capital lease, aggregating in the case
of all such indebtedness and obligations
an amount equal to or exceeding
threshold amounts to be agreed.
(h) A final judgment or judgments for
the payment of money shall be entered
against Grupo Mexico, GMM, Asarco or any
of their subsidiaries (except for
non-material subsidiaries, and except,
in the case of Asarco and its
subsidiaries prior to consummation of
the Tender Offer, judgments the
existence of which was already disclosed
and publicly available (or otherwise
known by officers of the Arranger or
Chase working on the Transactions) prior
to September 24, 1999) in an aggregate
amount for all such persons equal to or
exceeding threshold amounts to be agreed
and which have not been bonded, stayed
or satisfied for a period of 30 days or
more.
(i) There shall occur one or more ERISA
Events which individually or in the
aggregate results in or could reasonably
be expected to result in a material
adverse change; or there shall exist an
amount of unfunded benefit liabilities
(as defined in the
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<PAGE>
21
Statement of Financial Accounting
Standards No. 87), individually or in
the aggregate for all Plans (excluding
for purposes of such computation any
Plans with respect to which assets
exceed benefit liabilities), which could
reasonably be expected to result in a
material adverse change.
(j) There shall occur a change in
control of GMM, Asmex or (after the
consummation of the Tender Offer)
Asarco; or Persons (to be identified)
controlling Grupo Mexico (I.E., having
the power to elect a majority of the
members of the Board of Directors of
Grupo Mexico) on September 24, 1999,
shall cease to maintain such control.
(k) Default in the performance or
observation of any term or condition in
any material contract of Grupo Mexico,
GMM or Asarco, or any of their
subsidiaries, in each case taken as a
whole, that could reasonably be expected
to result in a material adverse change.
(l) So long as any obligations under the
A Tender Facility remain outstanding,
any Default or acceleration under the A
Tender Facility, or the R/C Facilities
(including Alternative R/C Facilities)
or the secured export note or other
long-term debt obligations of GMM (with
a threshhold amount, in the case of GMM,
of $30 million).
Voting: Amendments and waivers with respect to
the Credit Documentation shall require
the approval of Lenders holding not less
than a majority of the aggregate amount
of the Loans thereunder and commitments
under the related Facilities, except
that (a) the consent of each Lender
directly affected thereby shall be
required with respect to (i) changes in
the maturity of any Loan,
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22
(ii) reductions in the rate of interest
or any fee or extensions of any due date
thereof, (iii) increases in the amount
or extensions of the expiry date of any
Lender's commitment and (iv)
modifications to the pro rata provisions
of the Credit Documentation and (b) the
consent of 100% of the Lenders shall be
required with respect to (i)
modifications to any of the voting
percentages and (ii) releases of any
guarantee other than of a non-material
subsidiary (to be defined) or all or any
substantial part of the collateral.
Assignments and
Participations: The Lenders shall be permitted to assign
and sell participations in their Loans
and commitments, subject, in the case of
assignments (other than to another
Lender or to an affiliate of a Lender),
to the consent of the Administrative
Agent and Grupo Mexico (which consent in
each case shall not be unreasonably
withheld, provided that if a default
shall have occurred and be continuing
Grupo Mexico's consent shall not be
necessary). In the case of partial
assignments (other than to another
Lender or to an affiliate of a Lender of
any interest in the A Tender Facility),
the minimum assignment amount shall be
$5,000,000 unless otherwise agreed by
Grupo Mexico and the Administrative
Agent. Each assignment shall be subject
to payment to the Administrative Agent
of a processing fee of $3,500.
Participants shall have the same
benefits as the Lenders from which they
acquired their participations with
respect to yield protection and
increased cost provisions. Voting rights
of participants shall be limited to
those matters with respect to which the
affirmative vote of the Lender from
which it purchased its participation
would be required as described in items
(a) and (b) of the paragraph on "Voting"
above. Pledges of Loans in accordance
with applicable law shall be permitted
without restriction.
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Yield Protection: The Credit Documentation shall contain
customary provisions (a) protecting the
Lenders against increased costs or loss
of yield resulting from changes in
reserve, tax, capital adequacy and other
requirements of law and from the
imposition of or changes in withholding
or other taxes and (b) indemnifying the
Lenders for "breakage costs" incurred in
connection with, among other things, any
prepayment of a Eurodollar Loan (as
defined in Annex I) on a day other than
the last day of an interest period with
respect thereto.
Expenses and Indemnification: The Borrowers shall pay (a) all
reasonable out-of-pocket expenses of the
Administrative Agent and the Arranger
associated with the syndication of the
Credit Facilities and the preparation,
execution, delivery and administration
of the Credit Documentation and any
amendment or waiver with respect thereto
(including the reasonable fees,
disbursements and other charges of
counsel) and (b) all out-of-pocket
expenses of the Administrative Agent and
(after an Event of Default) of the
Lenders (including the fees,
disbursements and other charges of
counsel) in connection with the
enforcement of the Credit Documentation.
The Administrative Agent, the Arranger
and the Lenders (and their affiliates
and their respective officers,
directors, employees, advisors and
agents) will have no liability for, and
will be indemnified and held harmless
against, any loss, liability, cost or
expense incurred in respect of the
financing contemplated hereby or the use
or the proposed use of proceeds thereof
(except to the extent resulting from the
gross negligence or willful misconduct
of the indemnified party).
Governing Law and Forum: State of New York.
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Counsel to the Administrative
Agent and the Arranger: Milbank, Tweed, Hadley & McCloy LLP,
and Ritch, Heather y Mueller S.C.
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