Grupo Mexico Sets the Record Straight on Misinformation in Brownsville Lawsuit

Business Wire, June 12, 2008

ASARCO's Parent Company Asks U.S. Bankruptcy Court to Examine Unnecessary Legal Expenses Being Incurred by ASARCO

MEXICO CITY -- Grupo Mexico, S.A.B. de C.V. (GMexico) issued the following statement today to address several misperceptions promoted by ASARCO LLC as part of its fraudulent conveyance lawsuit against Americas Mining Corporation (AMC), a GMexico subsidiary. The case is currently being heard in the U.S. District Court of the Southern District of Texas in Brownsville. GMexico also called on the judge overseeing ASARCO's bankruptcy proceedings to carefully examine the questionable actions taken by ASARCO's Board and legal counsel, Baker Botts, which it believes are costing the company's creditors and shareholders millions in unnecessary expenses.

Among the misperceptions are:

* ASARCO has alleged GMexico stripped ASARCO of a valuable asset and left it to "die on the vine." In truth, the sale of ASARCO's majority stake in Southern Peru Copper Corporation (SPCC) to AMC in 2003 was part of a very successful restructuring undertaken by GMexico during a difficult operating period and low copper prices. The restructuring allowed ASARCO to eliminate all of its existing short-term debt obligations through 2013, significantly reducing its current and future financing costs, boost its credit ratings and reach a standstill agreement with the U.S. Department of Justice (DOJ) to help resolve its environmental liabilities. GMexico has always intended to maintain ASARCO's assets as part of its long-term productive facilities. That was GMexico's intention at the time and the company continues to demonstrate that commitment through its submission of a full payment plan to ASARCO and its creditors.

* Despite ASARCO's continuous effort to blame its financial troubles on the SPCC sale, ASARCO did not file for bankruptcy protection until two-and-a-half years after the restructuring, and only then after a debilitating four-month labor strike and the constant pressure from the DOJ and Environmental Protection Agency over unresolved environmental claims. GMexico firmly believes ASARCO's troubles derive largely from poor legal advice from ASARCO's law firm, Baker Botts, which incorrectly convinced the company's board members that the Chapter 11 process would solve all of ASARCO's problems by quickly resolving its environmental and unknown asbestos liabilities at a very low cost. Instead, just the opposite has occurred. Three years and millions of dollars in legal fees later, the company still faces numerous unresolved liabilities, has reached unnecessarily high settlements on others and has been largely unable to take advantage from the dramatic turnaround in commodity prices.

* Baker Botts' hefty legal expenses are being padded even further through ASARCO's fraudulent conveyance lawsuit against AMC. ASARCO, which is a 100% owned subsidiary of GMexico and is responsible for the lawsuit's legal costs and expenses, is using the case to try and obtain funds for the remediation of environmental claims against the company. Yet conveniently lost in ASARCO's arguments is that fact that the DOJ itself approved the SPCC sale in 2003 and has never objected to the transaction since. In fact, all the other parties involved approved the transaction, showing it generated fair market value for the benefit of all parties.

GMexico believes the behavior of the ASARCO Board members who approved the AMC lawsuit is reprehensible and they should be held accountable for all these unnecessary expenses, which otherwise could be used to pay environmental claims and creditors. The company also believes the U.S. Bankruptcy Court should review carefully the Board's behavior and the outrageous expenses incurred at the considerable cost and detriment of the creditors and shareholders.

GMexico continues to believe that the allegations made by ASARCO are without merit and it looks forward to successfully defeating the lawsuit.