Tronox Inc. has announced that it and certain of the company’s subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The filing does not include Tronox’s operations outside of the U.S., which are based in Australia, Germany and the Netherlands.
“After careful evaluation of all strategic alternatives, we have concluded that a Chapter 11 filing is the best way to address the company’s debt, in particular its legacy liabilities,” said Dennis Wanlass, Tronox chairman and chief executive officer. “We want to assure customers, suppliers and employees that our operations are continuing without interruption, and during the restructuring period, we will remain focused on continuing to provide customers with quality products and unsurpassed service.”
The company has taken steps to ensure the continued supply of goods and services to its customers, with a commitment for up to $125 million in new debtor-in-possession (DIP) financing from its existing lending group led by Credit Suisse.
The DIP financing provides Tronox with ample liquidity to continue operations as usual during the restructuring process. The company will use the financing to pay vendors for all goods and services produced after the filing date. Tronox has also requested court approval to continue to pay employees in the same manner as before the filing with no disruption, and expects the request to be granted as part of the court’s “first day” orders.
According to a statement released by the company, the decision to file was made to address legacy liabilities that Tronox incurred when it was spun off in 2006 by Kerr-McGee Corp., which has since been acquired by Anadarko. The liabilities include environmental remediation and litigation costs that Tronox was required to assume at the time of the spinoff. These liabilities are an obstacle to Tronox’s financial stability and success.