BANKRUPTCY WEEK AHEAD: Tronox Seeks Approval To Auction Assets
By Marie Beaudette Of DOW JONES NEWSWIRES
Chemical company Tronox Inc. (TRXBQ) will go to court Wednesday to seek approval to auction its assets, with Huntman Corp. (HUN) serving as the lead bidder with an offer worth $415 million.
Tronox is seeking to auction its assets on Dec. 8, followed by a sale hearing on Dec. 10. Huntsman has offered to buy Tronox’s titanium dioxide facilities in the Netherlands and the U.S., excluding those in Savannah, Ga.; a 50% joint venture interest in another titanium dioxide facility in Australia and associated mining and other operations; and electrolytic production facilities in the U.S.
(This item appears in Dow Jones’ Daily Bankruptcy Review newsletter.)
The chemical giant’s bid is subject to higher offers at the auction. Tronox is asking the New York bankruptcy court for permission to pay Huntsman a breakup fee of $12.45 million if it’s bested at auction.
Huntsman said it plans to finance about 50% of the purchase with debt.
“This acquisition, even before expected synergies, would be immediately accretive to our operating earnings and cash flow, as well as reduce our debt leverage,” Huntsman President and Chief Executive Peter Huntsman said in a statement last month announcing the deal.
Tronox, based in Oklahoma City, employs more than 1,800 people and last year had sales of more than $1.17 billion. The company filed for bankruptcy protection in January, weighed down by its environmental liabilities and debt left over from the 2006 spinoff by Kerr-McGee Corp.
On Friday, auto-parts supplier Lear Corp. (LEARQ) will ask the New York bankruptcy court for permission to send its Chapter 11 plan to creditors for a vote.
Under Lear’s Chapter 11 restructuring plan, the lenders would forgive their debt in exchange for a new $600 million term loan plus all of a reorganized Lear’s preferred stock, valued at $500 million, and a substantial share of the company’s new common stock.
Unsecured creditors, including bondholders owed $1.3 billion, would receive a chunk of Lear’s common stock plus warrants allowing them to purchase an additional 15% of the company’s shares. They are expected to recover about 43% on their claims.
Lear last month filed court documents indicating that its creditors would recover far less in a liquidation. According to an analysis prepared by Alvarez & Marsal, lenders would recover only 36% on their $2.3 billion in claims if the Southfield, Mich., company were to liquidate.
At Friday’s hearing, Lear will ask the court to approve an outline of the plan, called a disclosure statement. The court must approve the statement before creditors can begin voting on the plan.
Lear, which makes automotive seats and electronics, filed for Chapter 11 bankruptcy protection on July 7.
Star Tribune Holdings Corp., the publisher of the Minneapolis Star Tribune, will seek confirmation of its bankruptcy-exit plan Thursday.
Under the plan, the company’s lenders will trade $493 million in debt for a 95% stake in the reorganized company and $100 million in new secured notes. The lenders, led by Credit Suisse Group (CS), are expected to recover between 29.8% and 36.1% on their claims, according to court papers.
Unsecured creditors are slated to receive up to 5% of the initial distribution of stock and warrants for an additional 20%, subject to dilution. Unsecured creditors, owed about $150 million, stand to recover between 0.5% to 1.3%.
Star Tribune’s managers could also receive a share of the company’s equity as part of an incentive plan.
The company’s existing equity holders, including majority owner Avista Capital Partners, will see their interests canceled.
Star Tribune filed for Chapter 11 protection in January. Other newspapers companies, including Tribune Co. (TRBCQ) and the publisher of Philadelphia’s two daily newspapers, have also filed for bankruptcy protection in recent months amid a sharp drop in advertising revenue.
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