Tronox Files For Bankruptcy
January 19, 2009
Tronox said Monday that it has filed for bankruptcy protection for its US business operations.
The Oklahoma City, Okla.-based chemical maker is excluding its operations in Australia, Germany and the Netherlands from the filing. It has secured $125 million in debtor-in-possession financing from Credit Suisse and other lenders, which will be used to finance Tronox's operations during the bankruptcy process.
Tronox listed $1.5 billion in assets and $1.2 billion in liabilities in its bankruptcy filing in New York.
Dennis Wanlass, chief executive of Tronox, said the company filed for bankruptcy in order to handle legacy liabilities, which stemmed from its spin off from oil and gas exploration company Kerr-McGee in 2006. "We have concluded that a Chapter 11 filing is the best way to address the company's debt, in particular its legacy liabilities," he said.
Additionally, Tronox's financial performance was impacted by the recession and declining consumer product purchases. It recorded $1.1 billion in sales for the first nine months of 2008.
Kerr-McGee spun off Tronox through an initial public offering, selling 20% of stock it held in the business via the IPO, as well as saddled the chemical business with $550 million of debt.
Tronox's largest secured creditors include Lehman Commercial Paper, ABN AMRO, the Environmental Protection Agency and the US Nuclear
For Tronox, the Chapter 11 proceeding isn't completely unexpected. In July, Moody's Investors Service put the business under review for possible downgrade after the Oklahoma company was granted a waiver by its lending group. In the same month, Tronox hired Alvarez & Marsal to serve as a restructuring consultant.
Tronox isn't the only large chemical concern to file for bankruptcy protection of its US operations. Last week, Dutch chemical maker LyondellBasell, a portfolio holding of New York private equity firm Apollo Management, filed for Chapter 11 bankruptcy reorganization after obligations on its $8 billion bridge loan came due.
Kirkland & Ellis is serving as counsel to Tronox, while Kurtzman Carson Consultants is acting as claims agent.
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