US bankruptcy court accepts restructuring plan

US TITANIUM dioxide manufacturers Tronox have withdrawn from an asset auction and announced it has agreed a reorganisation plan to lift it out of bankruptcy.

Tronox has built its restructuring framework around a new debt facility and new equity financing. It has also agreed to establish several environmental legacy trusts and a litigation trust to deal with various environmental liabilities with the US government. The credit agreement for a $425m debtor-in-possession financing facility has been set up with a syndicate of lenders led by Goldman Sachs. Reuters reports that the judge in the trial has approved the framework.

Tronox first filed for chapter 11 bankruptcy in January, and said in September it would auction off most of its assets, including manufacturing facilities in the Netherlands and the US, and a 50:50 joint venture in Australia, with rival Huntsman the lead bidder or stalking horse – having agreed a price of $415m with Tronox. The bankruptcy court auction was due to take place on 21 December.

Huntsman tried to force Tronox to go through with the auction, but has now withdrawn its request in documents filed with the US bankruptcy court. Bloomberg reports that under the original purchase agreement the company will receive a $12.5m break-up fee as well as up to $300m in expenses from Tronox.