Tronox receives $415 million stalking horse bid from Huntsman

By Caroline Salls

Pittsburgh, Aug. 31 - Tronox Inc. has signed a $415 million stalking horse asset and equity purchase agreement with Huntsman Pigments LLC and Huntsman Pigment parent Huntsman Corp. for the sale of some of Tronox's operating assets, according to a Tronox news release.

"We are very pleased to have successfully met the commitment to our debtor-in-possession lenders to enter into a stalking horse purchase agreement by August 30, 2009," Tronox chairman and chief executive officer Dennis Wanlass said in the release.

"We believe that this asset and equity purchase agreement provides a solid foundation from which we can maximize the value of our assets through the section 363 auction process later this year."

The assets being sold include titanium dioxide facilities in The Netherlands and the United States, excluding Tronox's facility in Savannah, Ga.; a 50% joint venture interest in the Western Australian titanium dioxide, mine and beneficiating operations; and electrolytic production facilities in the United States.

Huntsman's offer will serve as the minimum floor bid for an auction process to be conducted in Tronox's Chapter 11 bankruptcy case. The company said the auction will likely take place in the fourth quarter of 2009.

According to a Huntsman news release, Huntsman intends to finance roughly 50% of the purchase price with debt.

"This acquisition, even before expected synergies, would be immediately accretive to our operating earnings and cash flow, as well as reduce our debt leverage," Huntsman president and chief executive officer Peter Huntsman said in the release.

"By combining our existing Pigments division with these assets, we also can realize substantial efficiencies that will benefit the customers, vendors, employees and other stakeholders of the combined business."

Huntsman said Tronox's joint venture partner in Australia, Exxaro Resources Ltd., has agreed to waive contractual restrictions on the transfer of Tronox's joint venture interests to Huntsman if it is ultimately approved by the bankruptcy court as the buyer of the assets.

Tronox, an Oklahoma City-based producer and marketer of titanium dioxide pigment, filed for bankruptcy on Jan. 12, 2009 in the U.S. Bankruptcy Court for the Southern District of New York. Its Chapter 11 case number is 09-10156.

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