Tronox reorganization plan confirmed, exit seen in 'upcoming weeks'

New York, Nov. 17 - Tronox Inc. said its plan of reorganization was confirmed by the U.S. Bankruptcy Court for the Southern District of New York at a hearing Wednesday.

The plan will become effective once the court enters a written order and other conditions are met.

Tronox said it expects to emerge from Chapter 11 "in the upcoming weeks."

"The court's confirmation of our restructuring plan is a major milestone for our company and represents the culmination of our restructuring efforts," said Dennis L. Wanlass, chairman and chief executive officer of Tronox, in a news release.

"We will emerge from the Chapter 11 process well-positioned to compete in the titanium dioxide and specialty chemical industries, having eliminated our significant environmental and other legacy liabilities."

Tronox said its plan, the first amended joint plan, was supported by the United States of America, through the Department of Justice, on behalf of and in consultation with the state, local, tribal and quasi-governmental authorities who have filed claims against Tronox and certain water authorities, Tronox's official committee of unsecured creditors, certain holders of Tronox's prepetition unsecured notes who are backstopping the equity financing for the plan, representatives of holders of tort claims against Tronox, and Tronox's official committee of equity security holders.

Under the plan:

• Tronox will reorganize around its existing operating businesses, including its facilities at Oklahoma City; Hamilton, Miss.; Henderson, Nev.; Botlek, the Netherlands, and Kwinana, Australia;

• Tronox will obtain up to $470 million of funded first lien debt and make a $185 million rights offering to unsecured creditors to meet its working capital needs and fund distributions required by the plan. The rights offering will be backstopped;

• Government claims related to Tronox's environmental liabilities at legacy sites will be settled through the creation of environmental response trusts and a litigation trust, to which Tronox will contribute $270 million in cash, 88% of Tronox's interest in the pending Anadarko litigation, some assets in Nevada, including the real property located in Henderson, and other insurance and financial assurance assets worth at least $50 million;

• Tort claimants who have asserted claims related to potential asbestos, benzene, creosote and other liabilities will receive recovery from trusts to be created by the plan. Tronox will contribute to the trusts $12.5 million in cash, 12% of Tronox's interest in the Anadarko litigation and some insurance assets;

• Holders of general unsecured claims will share 50.9% of the common equity of reorganized Tronox and be able to participate in the rights offering for up to 45.5% of the common equity of the reorganized company;

• Private parties holding indirect environmental claims will have their claims split for purposes of sharing in distributions to holders of general unsecured claims and holders of tort claims;

• Some holders of unsecured claims below $250 were not eligible to participate in the rights offering; they will receive 89% of their claim in cash;

• Existing holders of Tronox equity will receive a package of warrants, consisting of two tranches of warrants to purchase a combined total of 7.5% of the common equity of the reorganized company. Both will be exercisable for seven years. The tranche A warrants will be convertible into 3.5% of the equity at a strike price based on a $1.4 billion total enterprise value. The tranche B warrants will be convertible into 4% of the equity at a strike price based on a $1.5 billion total enterprise value.

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.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.