Tronox Inc. (TROX)

[josh4580]

Tronox Wins Approval of Bankruptcy-Plan Description (Update2)
2010-09-23 20:31:50.383 GMT


(Updates with judge’s comment in seventh paragraph.)

By Thom Weidlich and Tiffany Kary
Sept. 23 (Bloomberg) -- Tronox Inc. won court approval of the disclosure statement explaining terms of the chemical maker’s plan to exit bankruptcy protection.
U.S. Bankruptcy Judge Allan Gropper approved the statement today at a hearing in New York, bringing Tronox a step closer toward getting its reorganization plan approved.
“It appears to me that the disclosure statement is in fact very direct and very plain with regard to the summary of treatment of claims and equity interests,” Gropper said.
The judge on Sept. 17 approved Tronox’s agreement to pay bondholders to back an offer of new stock in a reorganized company, after an adviser to the company said delays might jeopardize Tronox’s environmental settlements.
Under the agreement, Oklahoma City-based Tronox would pay bondholders an 8 percent fee to back a $185 million rights offering of common stock in the new company.
Tronox can still consider a competing reorganization plan from its equity committee, Gropper said. The shareholders, like the bondholders, seek 8 percent in fees for backing the $185 million offering under either plan. Gropper today denied a termination fee of 3 percent, or $5.5 million, for the shareholders if their equity commitment doesn’t go through.
“There is no authority to impose such fees on the debtors at this stage,” the judge said.

Shareholder Delay

Gropper put off until Sept. 27 the question of whether he would approve the equity committee’s own disclosure statement.
David Critchlow, a lawyer for shareholders, asked for the delay in light of Gropper’s ruling on the termination fees.
“It is not in the debtor’s business judgment to pay this breakup fee” to the equity holders, Jonathan Henes, a lawyer for Tronox, told Gropper.
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).

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--Editors: Mary Romano, Charles Carter

To contact the reporters on this story:
Thom Weidlich in New York
at [phone] or [e-mail]; Tiffany Kary in New York at [phone] or [e-mail].

To contact the editor responsible for this story:
David Rovella at [phone] or [e-mail]