Web Date: January 13, 2009
Tronox Files For Chapter 11
Tronox, a manufacturer of the white pigment titanium dioxide, has filed for reorganization under Chapter 11. The bankruptcy does not include the company's non-U.S. operations.
In a press release, Tronox says it decided to reorganize in order to better handle legacy environmental liabilities dating from its spin-off from energy company Kerr-McGee in 2006. Tronox processes TiO2 in Hamilton, Miss.; Savannah, Ga.; the Netherlands; Germany; and Australia. In addition, the firm has electrolytic and specialty chemical facilities in Henderson, Nev., and Soda Springs, Idaho.
While in reorganization, Tronox says, it will have access to $125 million in debtor-in-possession financing from its lenders, led by Credit Suisse. The money will fund operations, vendor payments, and employee salaries.
"After careful evaluation of all strategic alternatives, we have concluded that a Chapter 11 filing is the best way to address the company's debt, in particular its legacy liabilities," Chief Executive Officer Dennis L. Wanlass says.
Tronox' 2008 financial results show that environmental legacy costs are not its only difficulty. In May, the company announced that higher costs and production problems in Australia and Germany would affect earnings. Tronox also announced cost-cutting moves including land sales, layoffs, and a hiring freeze that cut 68 positions, or about 13% of its U.S.-based workforce.
By the time Tronox released its second-quarter earnings, it had already received waivers on required debt repayments, according to an August conference call with investors. That quarter, the firm had a net loss of $34.4 million on sales of $403.8 million. The company planned to spend between $30 million and $35 million of a $183.8 million reserve fund for environmental remediation during 2008.
For the third quarter of 2008, Tronox reported a net loss of $37.9 million and long-term debt obligations of $548.3 million.
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