Tronox creditors oppose rights offering procedures, plan agreements

By Caroline Salls

Pittsburgh, Sept. 9 - Tronox Inc.'s plan support and equity commitment agreements and rights offering procedures drew opposition Thursday from creditors Andarko Petroleum Corp. and Kerr-McGee Corp., according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

Andarko and Kerr-McGee said the rights offering procedures unfairly impose an accelerated timeframe that strips general unsecured creditors whose claims are not allowed by the proposed Nov. 5 rights expiration date of the opportunity to participate in the most significant part of their proposed recovery.

Specifically, they said these creditors would lose the right to purchase up to 78.4% of the new common stock in reorganized Tronox.

Without this part of the recovery, Andarko and Kerr-McGee said general unsecured creditors will receive a distribution of only 15% to 22%.

"Class 3 creditors should not be barred from obtaining the maximum 75%-100% recovery available under the plan simply because their claims have not been allowed by an arbitrary and fast approaching deadline," the objection said.

As a result, Andarko and Kerr-McGee said the rights offering procedures should be modified to allow all class 3 creditors to receive equal economic value under the plan, regardless of when their claims are allowed.

In addition, the creditors said the equity commitment agreement allows the backstop parties to unilaterally terminate the agreement and avoid their commitment to backstop the rights offering based on conditions that will most likely not be satisfied.

Andarko and Kerr-McGee said the backstop parties could also receive an $11.1 million termination fee.

Tronox, an Oklahoma City-based producer and marketer of titanium dioxide pigment, filed for bankruptcy on Jan. 12, 2009. Its Chapter 11 case number is 09-10156.

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