A recent Law 360 story by Rose Krebs, “Attys Seek $13.5M in Fees in Grupo Mexico-Southern Copper Deal” reports that Andrews & Springer LLC and Friedman Oster & Teitel PLLC are seeking $13.5 million in fees for brokering a proposed $50 million settlement for Southern Copper Corp. shareholders in their Delaware Chancery Court suit against Grupo Mexico SAB that claimed the Mexican mining giant improperly bought control of two Southern Copper-related power plants.  The firms filed a motion with the court to approve the proposed settlement, award the attorneys’ fees — amounting to 27 percent of the settlement amount — and grant shareholder Carla Lacey a $5,000 incentive fee for bringing the suit on behalf of the proposed class of stockholders.

In December 2015, Lacey filed the proposed class action and derivative suit contending that Grupo Mexico and some of its directors breached their fiduciary duty and failed to seek a required independent review before structuring a deal to pay far less than Southern Copper's initial $350 million cost for the two plants that supplied power to Southern Copper's Mexican operations.  The suit also contended some Southern Copper directors failed in their duties to prevent “serial abuses of power” by Grupo Mexico.  Grupo Mexico, as controlling stockholder of Southern Copper, had exploited its control by causing Southern Copper to "assume meaningful risk" in connection with the construction of the power plants, the investor asserted.

Also, Grupo Mexico's debt expenses for the power plants were improperly tied to future profits from a 20-year agreement to supply electricity to Southern Copper's Mexican facilities as well as possible third parties, the suit said.  Those terms assured that Grupo Mexico would incur little risk and a prospect of "hundreds of millions, or even billions, of dollars in revenue" at the expense of Southern Copper, the shareholder complaint said.  In August, the parties entered into the $50 million settlement to “eliminate the distraction, burden, delay and expense of further litigation" and provide benefits to shareholders in the proposed class, the settlement said.

A hearing to consider approval of the settlement and to certify the proposed class consisting of holders of Southern Copper stock issued from March 2012 to December 2015, excluding those with ties to the director defendants or any entity Grupo Mexico or its subsidiary had a controlling interest in, is scheduled for Nov. 27, according to court documents.  The hearing will also address awarding the attorneys’ fees.  A brief the firms filed in support of the motion to award the fees was filed under seal.

According to affidavits filed with the court, Andrews & Springer spent roughly 4,200 hours at an estimated cost of about $1.9 million on the case while Friedman Oster & Tejtel worked about 4,500 hours at a cost of about $2.6 million.  Also, Andrews & Springer incurred about $154,000 in unreimbursed expenses such as filings, copying and experts fees while Friedman Oster & Tejtel had about $105,000 in unreimbursed costs, according to the affidavits.

Under the proposed settlement, Grupo Mexico or its wholly owned subsidiary Americas Mining Corp. will pay Southern Copper $50 million within 10 days of final approval by the court.  Southern Copper will then distribute the money to stockholders in the proposed class proportionally based on ownership.

The case is Lacey v. Mota-Velasco et al., case number 11779, in the Court of Chancery of the State of Delaware.