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Tronox Wins Interim Approval of $425 Million Loan to Fund Bankruptcy Exit
Tronox Inc., the bankrupt chemical maker, won court approval of a $425 million loan to replace a prior loan for the same amount, funding its exit from bankruptcy.
U.S. Bankruptcy Judge Allan Gropper approved the loan agreement today on an interim basis at a hearing in New York. The new loan, syndicated by Goldman Sachs Lending Partners LLC, will save Tronox about $1.45 million a month in interest expense, the company said in court documents.
“You’ve certainly highlighted the benefits of this amended financing, I will approve the financing,” Gropper told Tronox lawyer Patrick Nash after hearing that the loan’s interest rate is 2 percent lower than that of the prior loan.
The loan replaces a $425 million loan approved in December 2009, which funded operations in bankruptcy for the world’s third-largest producer of the white pigment titanium dioxide. The first loan had a framework to convert into a bankruptcy exit loan, but Tronox needed $90 million more to fund its exit after more payments for environmental and tort claims were needed than anticipated last year, the company said in court papers.
The need for more funding “prompted Tronox to refinance both tranches of the Existing Facility (to allow the entire $425 million facility to roll into exit financing) in addition to pursuing a revolving credit facility,” lawyers for the company wrote.
Final Order
The loan will default if a final order approving it isn’t entered by Nov. 17, the date on which Tronox plans to seek final court approval of its Chapter 11 plan, according to court papers.
Tronox will also seek court approval of a $125 million revolving credit facility and has an agreement with Goldman Sachs Lending Partners on an inter-creditor agreement that governs the loan, according to court documents.
Oklahoma City-based Tronox filed an outline of a reorganization plan on Sept. 1 that set aside $320 million to cover what it estimates are $1.4 billion to $5 billion in environmental claims. U.S. agencies, including the Environmental Protection Agency, had asserted as much as $10.5 billion in liabilities, which Tronox said were overstated.
The bankruptcy case is Tronox Inc., 09-10156, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
To contact the reporters on this story: Tiffany Kary in New York at tkary@bloomberg.net.
To contact the editor responsible for this story: David Rovella at drovella@bloomberg.net.
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