Another chemical manufacturer files for bankruptcy protection in the US
12 Jan 2009
After Netherlands-based LyondellBasell, the world's third-largest petrochemical company, filed for bankruptcy earlier this month (See: Dutch petrochemicals major LyondellBasell files for bankruptcy), its smaller peer Tronox Inc followed suit today with its filing with the US Bankruptcy Court in Manhattan, to address legacy liabilities.
Tronox said it have incurred legacy liabilities when it was spun off in 2006 by Kerr-McGee Corp. They include environmental remediation and litigation costs that Tronox was required to assume at the time of the spin-off, the company said.
The filing, which will allow the company to facilitate a financial restructuring to maximise value and strengthen operations, excludes Tronox's ex-US operations, which are based in Australia, Germany, and the Netherlands, the company added.
The Oklahoma City-based producer of titanium dioxide pigment used in paint, plastics and paper, cited assets of about $1.56 billion and liabilities of about $1.22 billion in its filing. Tronox said it has taken steps to ensure continued supply of goods and services to its customers, and has a commitment for up to $125 million in new debtor-in-possession (DIP) financing from its existing lending group led by Credit Suisse.
Companies use DIP financing to help them fund operations while they restructure debt. The company said it would use the financing to pay vendors for all goods and services provided after the filing date. The company has requested court approval to continue to pay employees and expects the request to be granted as part of the court's "first day" orders, it said.
On the announcement of bankruptcy filing, chairman and CEO Dennis Wanlass surmised that after careful evaluation of all strategic alternatives, it was concluded that a Chapter 11 filing was the best way to address the company's debt, in particular its legacy liabilities.
Wanlass added, "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."
