Tronox assets undervalued in Huntsman bid - shareholder group
By Santosh Nadgir
BANGALORE, Oct 27 (Reuters) - A group of shareholders of bankrupt U.S. chemicals maker Tronox Inc (TRXAQ.PK) said the $415 million bid for its titanium dioxide plants by rival Huntsman Corp (HUN.N) was "hundreds of millions of dollars less than the inherent fair value" of the assets.
In August, Huntsman said it would bid for Tronox's titanium dioxide plants in the Netherlands and the United States, a 50 percent joint venture interest in a titanium dioxide plant in Australia and electrolytic production facilities.
In a filing on Friday, the official committee of equity security holders claimed that Tronox's titanium dioxide operations were worth well over $1 billion.
Equity is typically wiped out in bankruptcy cases, but in Tronox the shareholder group has argued that the company still has value for its shareholders.
The group also asked the court to force Tronox to refinance its existing debtor-in-possession (DIP) loan with an alternative facility, saying the current arrangement provided by Tronox's secured lenders imposes an "artificial deadline" to sell the company on or before Dec. 10.
About 16 potential replacement DIP lenders were solicited by the committee's financial advisors, the filing said.
The committee added that it had proposed an alternative DIP loan that would eliminate the current facility's requirement that forces Tronox to sell all its assets in the next few weeks.
The U.S. operations of Tronox, which makes titanium dioxide pigment used in paint, plastics and paper, filed for Chapter 11 bankruptcy protection in January, less than three years after being spun off from Kerr-McGee.
A few months after the spin-off, Kerr-McGee was acquired by Anadarko Petroleum Corp (APC.N).
Tronox creditors have sued those responsible for putting together the spin off, saying it was structured in such a way to dump legacy liabilities of Kerr-McGee on the company and set the company up to fail.
The bankruptcy case is In re: Tronox Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-10156. (Reporting by Santosh Nadgir; Editing by Gopakumar Warrier)
