Tronox, Inc.

Background

Tronox was the world's third-largest producer and marketer of titanium dioxide pigment, a whitener / brightener used in hundreds of everyday products. The company had five manufacturing facilities in the U.S., Europe and Australia.

The company had experienced dramatic increases in ore, oil and energy prices, which were difficult to pass through to the customer. Tronox had approximately $215.0 million in senior debt, a $42.0 million securitization facility and a $110.0 million debtor-in-posession (DIP) facility. The company also had $450.0 million in pre-petition bonds.

The Project

Zolfo Cooper was engaged in September 2008 as the financial advisor to the senior lenders to:

  • Review Tronox’s business plan and 13 week cash flow forecast.
  • Size DIP Financing needs.
  • Evaluate in-court and out-of-court restructuring options.

Outcome

Key accomplishments:

  • Identified significant issues with Tronox’s business plan, estimated DIP financing needs and collaborated with the company and its advisors to develop revised projections that the lenders were comfortable with.

  • Facilitated the process to raise a consensual new-money DIP facility from pre-petition lenders.

  • Reviewed, analyzed and made recommendations relating to Chapter 11 and strategic operational items, including asset sales, plant closures and lease rejections.

  • Monitored company performance, industry dynamics, and 13-week cash flow weekly variances throughout the period under the credit amendments to ensure compliance.

  • Monitored the company’s 363 asset sale process, including the selection of a stalking horse bidder that provided full recovery to the lenders.

  • Negotiated with the unsecured creditors committee regarding a stand-alone plan of reorganization and settlement of pending litigation.

Tronox, the unsecured creditors and the U.S. government were able to reach an agreement on the pursuit of a stand-alone reorganization plan. Under the stand-alone plan, the company raised a new DIP facility that would repay outstanding DIP and pre-petition loans. Additionally, the pre-petition term loan lenders received a release from the litigation the unsecured creditor committee had been pursuing.