Finance

Bankrupt titanium dioxide maker Tronox has more time to pursue its reorganization strategy with new debtor-in-possession and exit financing provided by Goldman Sachs.

Tronox filed an emergency motion to obtain new financing on the eve of a planned Dec. 21, 2009, auction of many of its manufacturing assets. The U.S. Bankruptcy Court for the Southern District of New York issued an interim order approving the financing deal and the cancelation of the auction.

When it filed for Chapter 11 bankruptcy on Jan. 12, 2009, Tronox originally obtained 12 months of debtor-in-possession financing from Credit Suisse. With the new $425 million in senior secured loans from Goldman Sachs, Tronox can repay the existing loan and continue to operate while implementing its reorganization plan.

Under the plan, Tronox and a committee of bondholders and other unsecured creditors will raise additional debt financing, plus $115 million for environmental remediation trusts and a litigation trust. In a Dec. 22, 2009, filing, the U.S. attorney for the district agreed with the motion for the reorganization plan, saying it “will permit a reasonable and responsible resolution of Tronox’ environmental liabilities.” Tronox pointed to environmental problems dating back to its spin-off from Kerr-McGee as a major reason for its bankruptcy filing.

Rival titanium dioxide maker Huntsman Corp. had hoped to acquire most of Tronox’ assets for $415 million but has withdrawn its request that the court force the company to hold the auction. In a statement, Huntsman CEO Peter R. Huntsman said, “While we are disappointed in the result, it became clear that to prevail over the ad hoc bondholders, we would have to overpay for these assets.”