Tronox Inc. (TROX)

[Madclown]

I think there are only two reasons why someone would pay $130 for bonds that are worth $120 to $125 depending on emergence date and pendency interest rate. It is either a hedge against an equity position or the bonds are worth much more than $120 or even $130 in an equity cramdown.

If bondholders keep bidding it up they will make our case for us. If "takeout" language starts to surface, they won't trade at $130 any longer. There is much more value right now on the equity side in a bond take-out. In a cramdown/theft/value-suppression scenario, the bonds soar to near or even above $200 given the $400+ Million of back-end equity that exists. The purchasers for value at $130 are trying to get ahead of that trade and in so doing are tipping their hand. In one of CRT Capitals write-us on the bonds they assigned a value to the bonds of 193% when participating in the bondholder's rights offering assuming no equity recovery. I think the landscape for equity recovery has changed dramatically since that time.

I believe the equity is worth as is stated in the valuation portion of the letter. If I didn't, I wouldn't have posted it or I would have provided some disclaimer. I see value in excess of $10 per share using the most ridiculously conservative multiples. The trick here is to unlock that value. That is why we have the equity committee and their financial advisors, Eureka Capital. They should be going out into the financial marketplace to look for a sponsor to backstop a rights offering or other source of funds to contribute to the reorg effort. One of the members of our equity committee runs an organization that specializes in DIP financing and emergence financing and he is a shareholder alongside of us. I believe he is the second largest shareholder. We are in good hands.