Tronox emerges from Chapter 11 bankruptcy with new capital structure

By Caroline Salls

Pittsburgh, Feb. 14 - Tronox Inc. has emerged from Chapter 11 bankruptcy, according to a company news release.

"Our emergence from bankruptcy and our new capital structure is a significant accomplishment and makes Tronox a much stronger company for the benefit of our stakeholders, including our customers, vendors, employees, joint venture partner and shareholders," chief executive officer Dennis L. Wanlass said in the release.

"We have successfully restructured our balance sheet while maintaining our business relationships and significantly improving our operating performance.

"We emerge today with a portfolio of world-class titanium dioxide and mineral sands assets and our electrolytic business units strategically positioned to provide our customers around the globe with a reliable supply of high quality products and services."

Tronox's plan of reorganization was confirmed in November by the U.S. Bankruptcy Court for the Southern District of New York.

Plan terms

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. Its Chapter 11 case number is 09-10156.

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