Tronox's New Bankruptcy Plan Includes $320 Million for Environment Claims

Tronox Inc. filed a new bankruptcy plan that includes settlements allowing the chemical maker to set aside $320 million for environmental claims.

The amended plan, filed today in U.S. Bankruptcy Court in Manhattan, contains new agreements with creditors and government agencies. Tronox said on Aug. 30 it had reached deals to settle environmental disputes and raise enough cash to exit bankruptcy.

“Tronox is very pleased that after extensive, good-faith negotiations, it has reached a comprehensive settlement with its creditor constituencies that forms the basis for the plan,” lawyers for the company wrote.

Under the amended plan, unsecured creditors will get 75 cents to 100 cents on the dollar, compared with an estimated 80 cents under the old plan. The $320 million that will go to cover environmental claims satisfies an estimated $1.4 billion to $5 billion in claims. At least $16.5 million will be set aside to cover claims in lawsuits of $500 million to $1 billion.

Tronox said Aug. 30 that about $170 million will be raised through an offering of 78 percent of the stock in the reorganized company. Holders of more than 58 percent of unsecured notes and other creditors agreed to buy any stock that isn’t sold in the offering, which is open to unsecured creditors with claims of more than $25,000.

The Oklahoma City-based chemical maker, in bankruptcy since January 2009, reached agreements in August to increase exit financing by $90 million, giving it $468 million in debt upon emergence from Chapter 11 protection.

Rights Offering

Backers of the rights offering will give Tronox $15 million in cash in exchange for convertible preferred stock, according to the filing. The new plan follows months of negotiations to update an accord reached in December.

Government agencies sought more money to resolve environmental claims after Tronox outperformed its 2009 projections. They would now get $270 million, $165 million more than in the December agreement, and tort claimants would receive $12.5 million in cash, an increase of $5.5 million.

The U.S. also would get 88 percent of proceeds from anything Tronox wins in its lawsuit seeking to recover cleanup costs from Anadarko Petroleum Corp. and its Kerr-McGee Corp. unit. Tort claimants would get the remaining 12 percent.

The bankruptcy case is Tronox Inc., 09-bk-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Tiffany Kary in New York at tkary@bloomberg.net.

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