Anadarko fails to settle $25 billion Tronox lawsuit

Thu Jul 19, 2012 2:43pm EDT

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(Reuters) - Anadarko Petroleum Corp (APC.N) has failed to settle a $25 billion lawsuit brought by paint materials company Tronox Inc (TROX.N), and as a result a trial will resume next week, a lawyer for Tronox said on Thursday.

Shares of Anadarko fell as much as 5.2 percent, then recovered to trade down less than 1 percent at $71.97 on the New York Stock Exchange. A settlement would have clarified the oil and gas company's ultimate responsibility to cover Tronox's environmental liabilities.

Tronox has claimed that when it was spun off in 2005 by Kerr-McGee Corp, which Anadarko later bought, it had been saddled with liabilities that led to its January 2009 bankruptcy filing. Tronox emerged from Chapter 11 in February 2011.

With the support of the U.S. Environmental Protection Agency, Tronox also claims that Anadarko should pay for environmental cleanup at more than 2,000 polluted U.S. sites.

"There is no settlement agreement, and we are proceeding with trial on Tuesday," John Hueston, a partner at Irell & Manella representing Tronox and the United States, said in a telephone interview.

Hueston declined to comment on any settlement talks since at least July 12, when the nonjury trial was put on hold. He also declined to comment on whether talks would be scheduled.

Anadarko, based in The Woodlands, Texas, has argued that there was no fraud, and that Tronox's problems were linked to the U.S. housing slump and tight credit conditions.

John Christiansen, an Anadarko spokesman, said: "We remain committed to resolving the Tronox litigation through informal negotiations or other alternative dispute resolution mechanisms." He declined to discuss the status of such talks.

The trial in U.S. Bankruptcy Court in Manhattan began in May.

Anadarko has set aside $525 million for a settlement, though analysts have said a payout could be several times higher.

"This outcome is modestly negative" for Anadarko stock, Eliecer Palacios, an energy analyst at Maxim Group LLC in New York, wrote in a research note. "The market was expecting a friendly negotiation over settlement."

Tronox is based in Oklahoma City, Oklahoma, and makes titanium dioxide used in paints. It is seeking $15 billion of assets and $10 billion of interest from Anadarko.

U.S. Bankruptcy Judge Allan Gropper has been overseeing the trial, which is expected to run through August.

Tronox shares were up less than 1 percent at $119.90.

The case is In re: Tronox Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-10156.

(Reporting by Jonathan Stempel in New York; Additional reporting by Swetha Gopinath in Bangalore)

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