Tronox gets court OK to modify plan, solidifies stakeholder support

By Lisa Kerner

Charlotte, N.C., Nov. 17 - Tronox Inc.'s proposed modifications to its first amended joint plan of reorganization were approved, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, mediation led to a settlement with the official committee of equity security holders that secures the committee's support for the plan and eliminates the shareholder group's planned objections to the plan's confirmation.

Existing shareholders will receive an improved package of warrants, consisting of two tranches of warrants, each exercisable for seven years, under the modified plan.

The tranche A warrants will be convertible into 3.5% of the common equity in reorganized Tronox issued on the plan effective date, at a strike price based on a $1.4 billion total enterprise value. The tranche B warrants will be convertible into 4% of the common equity in reorganized Tronox, at a strike price based on a $1.5 billion total enterprise value.

The tranche A and tranche B warrants will convert into the respective percentages of ownership of the new common stock, subject only to dilution by an equity incentive plan that is still being negotiated.

Under the settlement, Tronox shareholders will receive their share of the warrants regardless of whether they vote to accept or reject the plan.

The company's plan confirmation hearing began on Wednesday.

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

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