TRXAQ Tronox Wins Approval To Borrow $125M To Exit From Bankruptcy Oct 28, 2010 16:03:03 (ET)
By Patrick Fitzgerald
Of DOW JONES DAILY BANKRUPTCY REVIEW
A New York bankruptcy judge said Tronox Inc. (TRXAQ) can borrow up to $125 million to fund its operations upon exiting bankruptcy.
Judge Allan Gropper of the U.S. Bankruptcy Court in Manhattan Tuesday signed off on Tronox's request to enter into the financing package, which is being provided by an arm of Wells Fargo & Co. (WFC).
The senior-secured loan from Wells Fargo is in addition to another bankruptcy-exit financing package from lenders led by Goldman Sachs Group Inc. (GS). That loan consists of a $425 million term loan and the option for an additional $90 million revolving credit line.
Tronox says its restructuring plan calls for it to emerge from Chapter 11 with a total of $470 million in debt borrowed under one or both loans.
The company had said it wanted to take advantage of favorable conditions in the credit markets to line up the additional financing.
The Wells Fargo loan will bear an interest rate of the London interbank offered rate, or Libor, plus 0.5%, or some similar formula.
"Tronox has determined that it is in its best interests to act now and take advantage of current market conditions to ensure the availability of exit financing on favorable terms," the company said.
Tronox, a maker of the whitening pigment titanium dioxide used in products ranging from toothpaste to paint, is readying its exit from Chapter 11 after coming to grips with its environmental liabilities.
The company's proposed plan would require Tronox to fund environmental and tort creditor trusts. The cash portion of those trusts would be funded by the loans and the anticipated $185 million sale of new Tronox stock to its unsecured creditors through an equity-rights offering.
The Oklahoma City company filed for Chapter 11 protection in January 2009, blaming environmental liabilities it took on as part of its 2006 spinoff from Kerr-McGee Corp., which was later acquired by Anadarko Petroleum Corp. (APC). In addition to the cash, the trusts will receive proceeds from insurance policies and any proceeds from a lawsuit filed against Kerr-McGee.
(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection.)
-By Patrick Fitzgerald, Dow Jones Daily Bankruptcy Review; 202-862-3544; patrick.fitzgerald@dowjones.com
(END) Dow Jones Newswires
October 28, 2010 16:03 ET (20:03 GMT)
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