Tronox files bankruptcy to address legacy liabilities, gets $125 million DIP loan commitment

By Caroline Salls

Pittsburgh, Jan. 12 - Tronox Inc. filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Southern District of New York.

The company said the filing does not include its operations outside of the United States.

"After careful evaluation of all strategic alternatives, we have concluded that a Chapter 11 filing is the best way to address the company's debt, in particular its legacy liabilities," chairman and chief executive officer Dennis Wanlass said in the release.

Tronox said it incurred legacy liabilities when it was spun off in 2006 by Kerr-McGee Corp., which has since been acquired by Anadarko.

The liabilities include environmental remediation and litigation costs that Tronox was required to assume at the time of the spinoff, the release said. The company said these liabilities are an obstacle to its financial stability and success.

In conjunction with the filing, Tronox has secured a commitment for up to $125 million in debtor-in-possession financing from its existing lender group, led by Credit Suisse. The loan includes a $10 million letter-of-credit subfacility.

According to the release, the DIP financing will provide Tronox with ample liquidity to continue operations as usual during the restructuring process, as the company will use the financing to pay vendors for all goods and services provided after the filing date.

The DIP facility will mature 364 days after the bankruptcy filing date.

Interest will be Libor plus 950 basis points.

The company has requested court approval to continue to pay employees in the same manner as before the filing with no disruption.

According to court documents, Tronox had $1.557 billion in assets and $1.222 billion in debt at Nov. 30.

The company's largest unsecured creditors include:

• Indenture trustee Wilmington Trust Co., Wilmington, Del., with a $350 million corporate debenture claim;

• Richards Bay Iron & Titanium Pty Ltd., Richards Bay, South Africa, with an $8.93 million trade claim; and

• Oxbow Calcining LLC, West Palm Beach, Fla., with a $1.77 million trade claim.

Tronox is an Oklahoma City-based producer and marketer of titanium dioxide pigment. Its Chapter 11 case number is 09-10156.

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