Only if you are a bondholder do you get to participate in the rights offering that conveys 70% of the reorganized equity. Under the current PSA, the current equity holders will receive no distribution and will not be invited to participate in the rights offering. Don't be confused by the term "Equity Commitment Agreement" as it only relates to the bondholders who are to become the new equity holders in reorganized Tronox. For those of us who go looking for a silver lining, the following language can be found prominently buried in a footnote within the PSA:
"Notwithstanding anything in the Term Sheet, the Parties agree that they will meet with the Equity Committee to discuss potential recovery to the existing equity holders. The Debtors and any other Party may discuss proposals with respect to, and engage in negotiations regarding, such recovery with the Equity Committee and the other Parties; provided, however, that the consent of all Parties shall be required before any such recovery is provided for under a plan."
Also, on March 1, 2010, the Company made the following statements within its motion to extend exclusivity out to the statutory maximum 180 days (July 12, 2010):
“Throughout these chapter 11 cases, Tronox has focused on maximizing value for all stakeholders. Early in these chapter 11 cases, Tronox, in accordance with the requirements of its DIP facility, entered into an agreement to sell substantially all of its assets to affiliates of Huntsman Corporation (“Huntsman”) and obtained approval for a competitive auction process. Always cognizant of the desires of its stakeholders to explore a standalone plan and its duty to maximize value, Tronox negotiated flexibility into the asset purchase agreement with Huntsman to engage in a dual path process of either selling its assets or consummating a standalone plan of reorganization. Since this Court’s December 10, 2009 order extending Tronox’s Exclusive Periods to March 15, 2010 and May 14, 2010, respectively, and as a result of herculean efforts, Tronox and its key creditor constituencies reached an agreement on the framework and substance of a plan of reorganization, thereby eliminating the need for an auction. Consequently, Tronox cancelled its scheduled auction and, since that time, has focused on negotiating and documenting a standalone plan of reorganization.
The negotiation and documentation of the standalone plan is complex. Tronox must make sure numerous creditor constituencies with disparate rights and views are comfortable with the plan, which takes careful consideration and time. In addition, Tronox is working hard to attempt to achieve a fully consensual plan by brokering a settlement between Tronox’s equity committee and creditor constituencies. Based on the progress Tronox has made to date and the momentum it has generated towards constructing a standalone plan, ample cause exists to extend the Exclusive Periods for a fourth time to enable Tronox to bring these chapter 11 cases to a successful end.”
“…In addition, Tronox has engaged in extensive discussions with the Equity Committee in an effort to incorporate the Equity Committee into the existing plan framework, including scheduling and participating in meetings with the Equity Committee on January 20, 2010 and with the Equity Committee, the Creditors’ Committee and the ad hoc bondholder group on February 24, 2010. Tronox intends to continue these negotiating efforts in hopes of presenting this Court with a fully consensual plan of reorganization before confirmation, if such a plan is possible.”
“Here, ample cause exists to extend Tronox’s Exclusive Periods. Tronox’s efforts and foresight while negotiating the asset purchase agreement with Huntsman have placed these chapter 11 cases on a track to the successful consummation of a standalone plan. Now, Tronox is focused on negotiating and drafting the necessary documentation for that plan, as well as trying to bring the Equity Committee into the deal and obtain its support for the plan. Tronox has earned the right to continue to captain the ship to confirmation without interference or distraction from any competing plans.”
“…With that goal in mind, Tronox remains committed to including the Equity Committee in the plan of reorganization, if a deal with the Equity Committee is feasible, and, in that regard, Tronox has met with the Equity Committee in an effort to reach full consensus on that plan...”
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