Anadarko says may owe $850 million, not $14.2 billion, on Tronox

NEW YORK Mon Jan 13, 2014 7:14pm EST

NEW YORK (Reuters) - Anadarko Petroleum Corp said it should pay as little as $850 million in damages over the 2005 spinoff of paint materials company Tronox Inc, 94 percent below the maximum amount a federal bankruptcy judge said it might owe.

The estimate was provided on Monday, one month after U.S. Bankruptcy Judge Allan Gropper in Manhattan said a higher payout of $14.17 billion might be in order because Anadarko's Kerr-McGee Corp unit intended to harm Tronox creditors by saddling the spinoff with unsustainable environmental liabilities.

His December 12 decision sent Anadarko's share price down 6.4 percent the next day in part because the oil and gas exploration company and some analysts expected damages would be much lower.

Tronox filed for Chapter 11 protection in 2009 and also sued Anadarko and Kerr-McGee, which Anadarko had bought three years earlier, claiming the spinoff was fraudulent because of the environmental liabilities.

In his 166-page decision, Gropper concluded that Kerr-McGee "acted with actual intent to hinder or delay creditors," in a spinoff that left Tronox "insolvent and undercapitalized (and) was not made for reasonably equivalent value."

He said Anadarko might owe between $5.15 billion and $14.17 billion to a litigation trust set up for Tronox creditors.

But in a court filing on Monday, Anadarko said Gropper misread Tronox's reorganization plan when determining liability, and that any damages should simply, "restore the parties to their pre-transfer positions."

Anadarko, which is based in The Woodlands, Texas, said net damages should be $850 million, and no more than $1.76 billion.

REMEDIAL, NOT PUNITIVE

Gropper's findings are, "contrary to the court's stated view that the purpose of the applicable law is 'remedial rather than punitive,'" Anadarko Chief Executive Al Walker said in a statement. "We continue to reserve all of our objections to the opinion and our right to appeal."

John Hueston, a lawyer for the Tronox litigation trust, said in an email: "We strenuously disagree with Anadarko's tortured effort to rewrite Judge Gropper's findings and to define a new and lower range of liability. We will provide an expansive written response on February 12th."

Tronox makes titanium dioxide used in paints.

It has said it would receive no direct benefit from a judgment, of which 88 percent would go to trusts for environmental cleanup, and 12 percent to other claimants.

The litigation trust represents entities that claimed that pollution attributable to Tronox resulted in health problems.

With the U.S. government's backing, it had sought $25 billion to clean up more than 2,000 U.S. sites.

Anadarko shares closed down $1.46, or 1.8 percent, at $78.37 on Monday. They closed at $83.67 on December 12, 2013.

The case is Tronox Inc et al. v. Kerr McGee Corp et al., U.S. Bankruptcy Court, Southern District of New York, No. 09-ap-01198.

(Reporting by Jonathan Stempel in New York. Editing by Andre Grenon)

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