Tronox tweaks rights offering terms in amended reorganization plan

By Caroline Salls

Pittsburgh, Sept. 22 - Tronox Inc. filed an amended plan of reorganization and disclosure statement ahead of the disclosure statement approval hearing scheduled for Thursday, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

The amended plan revises the terms of the company's proposed rights offering and eliminates a $15 million investment scheduled to be made in exchange for convertible preferred stock.

Specifically, under the amended plan, Tronox will rely on a combination of debt and new money equity investments to meet its working capital needs and fund distributions required by the plan, which will include total funded first-lien debt of no more than $468 million and the proceeds of a $185 million rights offering open to all unsecured creditors.

Eligible creditors will receive rights to purchase shares of new common stock based on a 17.6% discount to the plan total enterprise value of $1.063 billion, in exchange for an aggregate of up to 45.5% of the new common stock.

Under the previous plan, the creditors would have received rights to purchase shares based on a 34.1% discount for a total of up to 78.4% of the stock.

The backstop parties have agreed to backstop the rights offering for consideration of 8% of the $185 million equity commitment, up from 6% of a $170 million commitment, payable in the form of additional equity to the backstop parties.

Amended plan terms

Under the amended 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 rely on a combination of debt and new money equity investments to meet its working capital needs and fund distributions required by the plan, which will include total funded first-lien debt and the proceeds of a $185 million rights offering;

• 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 pending Anadarko litigation, some Nevada assets and some 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 recover from trusts to which Tronox will contribute $12.5 million in cash, 12% of Tronox's interest in the Anadarko litigation and insurance assets worth at least $4 million;

• Holders of general unsecured claims will receive their share of 50.9% of the common equity of reorganized Tronox, up from 16.9% under the previous plan, as well as valuable rights to participate in the rights for a total of up to 45.5% of the common equity of reorganized Tronox;

• 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;

• A convenience class will be created consisting of certain unsecured claims below $250 that will not be eligible to participate in the rights offering. Holders of these claims will recover 89% in cash; and

• Existing equity holders will receive warrants to purchase their share of up to 5% of the common equity of reorganized Tronox if they vote to accept the plan.

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.

© 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.