US Tronox cancels plant auction in new bid to exit bankruptcy

HOUSTON (ICIS news)-- US pigment producer Tronox cancelled Monday's auction to sell its most of its plants, a spokesman said - as the company now plans to emerge from bankruptcy protection as a standalone company.

Under the cancelled auction, rival pigment producer Huntsman had submitted a $415m (€291m) stalking-horse bid to acquire the titanium dioxide (TiO2) plants.

A stalking-horse bid sets a price floor for the subsequent auction. Huntsman would have acquired the plants if no one submitted a higher bid.

Huntsman was not immediately available for comment. However, the company had filed motions earlier, seeking to compel Tronox to hold the auction.

The cancelled auction is part of a new strategy, in which Tronox would emerge from Chapter 11 bankruptcy protection as a standalone company.

The new strategy emerged during the past several weeks. A shareholder committee opposed the auction, stressing the need for Tronox to propose a such a reorganisation plan.

The plan still needs court approval.

The strategy calls for a new debt facility, new equity financing and trusts that would address the company's legacy environmental liabilities.

Those liabilities were among the reasons for Tronox's bankruptcy filing earlier this year.

The reorganisation plan would issue equity to the holders of general unsecured claims, Tronox said. Owners of common stock would recover nothing.

Meanwhile, Tronox has lined up $425m in debtor-in-possession (DIP) financing to pay for day-to-day operations through the effective date of the plan, the company said.

To fund $115m in environmental and litigation trusts, Tronox has entered into an equity commitment agreement with bondholders, the company said. Essentially, bondholders have agreed to provide more money in return for equity in Tronox.

The trusts could grow if Tronox prevails in its lawsuit against former corporate parent Kerr-McGee and Anadarko Petroleum.

Anadarko acquired Kerr-McGee following the spin-off of Tronox.

The following lists the Tronox plants included in Huntsman's bid:

*joint venture with Exxaro Resources

($1 = €0.70)

For more on TiO2 visit ICIS chemical intelligence
For more on Huntsman visit ICIS company intelligence
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