Standard & Poor's warned Tuesday that it has placed its ratings for Grupo Mexico and its subsidiaries Americas Mining Corp. (AMC), Southern Copper Corp., and Minera Mexico S.A. de C.V. on CreditWatch with negative implications.
S&P Credit Analysts Juan Pablo Becerra and Enrique Gomez Tagle cited a U.S. District Court decision last week ordering AMC to return more than 260 million shares of Southern Copper Corp. stock, worth almost $4.7 billion, and pay $1.35 billion in monetary damages to Asarco.
The analysts suggested the decision could have a negative effect on the companies' financial profile, including a potential significant near-term effect on liquidity.
The U.S. District Court in Brownsville, Texas, said it will enter judgment with the final calculation of monetary damages on April 15, 2009.
Although Grupo Mexico said it will appeal the ruling, S&P noted that AMC would be required to post an appeal bond. The CreditWatch listing reflects our view of the risk that an appeal bond could be required in a form and amount that could potentially change GMexco and AMC's debt-free policy and/or affect both companies' liquidity, the analysts said.
We also believe there is a risk that SCC's financial profile could suffer as a result of a more aggressive financial policy, they added.