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Fitch: No Rating Impact Expected for Grupo Mexico and AMC following USD2.1B Payment to SCC

CHICAGO--(BUSINESS WIRE)-- The Issuer Default Ratings of Grupo Mexico S.A.B. de C.V. (Grupo Mexico) and of Americas Mining Corp (AMC), its 100% owned mining subsidiary, are both expected to remain unchanged at 'BBB' following AMC's recent payment of USD2.1 billion in cash to its 80.9% owned subsidiary, Southern Copper Corp (SCC), according to Fitch Ratings.

The recent payment to SCC follows AMC's unsuccessful appeal on Aug. 27, 2012 against the Delaware Court of Chancery (Chancery Court) ruling in October 2011. SCC in turn paid the USD316 million in relation to the attorneys' fees awarded by the Chancery Court.

AMC previously indicated that it could pay the amount using cash or a transfer of SCC shares if the ruling was upheld following its appeal. Due to a significant increase in the share price of SCC, the company decided to pay the amount exclusively in cash, financed by a USD2.1 billion syndicated loan with a term of one year.

Fitch views the transaction as an effective transfer of USD400 million of value to the 19.1% minority shareholders of SCC, following final resolution of the seven-year dispute. This amount includes the original USD241 million proportionally awarded to minority shareholders with USD159 million of interest accrued over the period.

AMC was ultimately unsuccessful in defending and appealing this verdict and has no further viable recourses under NAFTA. The Chancery Court ruled and upheld that Grupo Mexico, AMC's sole parent, breached its fiduciary duty of loyalty to Southern Peru and its minority shareholders by causing them to acquire the controlling 99.15% interest in Minera Mexico S.A. de C.V. for significantly more than it was worth. The merger was announced on Nov. 22, 2004, and created SCC as it exists today.

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Source: Fitch Ratings