| NEW YORK, July 12
NEW YORK, July 12 The trial between oil and gas
producer Anadarko Petroleum and paint materials company
Tronox Inc has been adjourned for one week so the two
companies can try to hammer out a settlement of their $25
billion dispute, according to a court filing.
The news lifted shares of both companies with Anadarko
climbing as much as 4.2 percent before easing to close at
$68.12, up 2.3 percent. Tronox shares rose about 4.1 percent to
The two companies are locked in a battle in New York
bankruptcy court over environmental liabilities related to the
spinoff of Tronox from Kerr-McGee Corp, which was purchased by
Tronox, which filed for bankruptcy in 2009, makes titanium
dioxide used in paints and has argued its spinoff was fraudulent
because of environmental liabilities that made the company
It has said Anadarko should pay for environmental clean-up
at more than 2,000 polluted sites in the United States. It is
seeking $15 billion in assets and $10 billion in interest
payments from Anadarko.
Tronox emerged from bankruptcy in February 2011 after a
battle among creditors over payouts, and new Tronox shares now
trade on the New York Stock Exchange.
The litigation trust, which has been joined by U.S.
Department of Justice and the Environmental Protection Agency in
the case, represents current and future claimants against the
estate for environmental and other liabilities, including more
than 8,000 tort claims.
Analysts have said a resolution to the case would allow
Anadarko shares to recover losses suffered in recent weeks. The
company has so far set aside $525 million in reserves, though a
settlement could reach $2.5 billion.
An Anadarko spokesman declined to comment on the
negotiations, and the trustee for the Tronox litigation trust
did not immediately respond to a request to comment.
Mark Hanson, an equity analyst at Morningstar, said the
Tronox litigation could ultimately settle and that it could cost
Anadarko about $1 to $2 a share, while Oppenheimer & Co's Fadel
Gheit put the cost as high as $2.40 per share.
During the trial, Tronox's valuation expert argued that
Tronox was more than $1 billion short of funds when the IPO took
place in November 2005. Anadarko lawyers disputed that, arguing
that the company had received a take-over offer of $1.3 billion
just days before the IPO.
The case is one of a handful of large so-called fraudulent
conveyance cases in bankruptcy court in the past few years, such
as in the bankruptcy of Lyondell Chemical when creditors argued
against the legality of the leveraged buyout that created the
company's debt load.
Anadarko argues there was no fraud, and that the company's
problems were due to the housing market collapse and stricter
lending that made it impossible to refinance its debt.
Last month, at a Citigroup energy conference, Anadarko Chief
Executive Al Walker said the company tried unsuccessfully to
have settlement talks, and hoped that talks could occur as the
The trial, which is being heard by Judge Allan Gropper
without a jury, has been in session sporadically. It is expected
to run through the end of August.
Anadarko is scheduled to begin presenting witnesses on July
17. Potential witnesses include Leroy Richie, a former general
counsel at Chrysler Corp and a Kerr-McGee board member, and
Joseph Flake, a vice president in the Kerr-McGee chemical
business that became Tronox.
Former Kerr-McGee CEO Luke Corbett and Chief Financial
Officer Robert Wohleber, and James Haddock, a former mayor of
Avoca, Pennsylvania, the site of a shuttered Kerr-McGee chemical
plant that had to be remediated, already testified.
Haddock said in court that he trusted Kerr-McGee in the
early days, and that it was a good corporate citizen. But later,
they started misleading him.
"I became a believer that something wasn't right," he said.
He was part of a group of residents that settled with Kerr-McGee
over alleged exposure to carcinogens.