UPDATE 2-Tronox shareholders’ plan opens value fight

* Rival plan sets stage for fight over chemical company

* Court may allow competing plans to be sent to investors

* Company’s shares up 26 pct in pink sheet trading

By Tom Hals

WILMINGTON, Del., Sept 3 (BestGrowthStock) – Shareholders of Tronox
Inc (TRXAQ.PK: ) filed a rival reorganization plan, setting up a
battle that will turn on the chemical company’s worth.

The new plan, filed Thursday in Manhattan bankruptcy court,
puts a higher value on the business than the company’s plan,
allowing stockholders to claim a larger recovery. Shareholders
generally only get a recovery in bankruptcy after other
creditors are paid.

Tronox filed its plan, backed by creditors and the U.S.
government, earlier this year but has yet to win the necessary
court approval to put it to a creditors’ vote. In an effort to
head off a court battle over procedure, the company agreed last
month to let shareholders put forward their own plan.

Documents backing both plans are scheduled to be considered
by the court on Sept. 23.

If differences over the rival plans are not resolved, the
court could clear the way for both to be sent to creditors and
shareholders for a vote. That would set the stage for a legal
battle to confirm one of the plans, as happened in the fight
over the bankrupt Trump Entertainment Resorts.

Shareholders argue Tronox is worth $1.25 billion, based on
a Young & Partners LLC estimate. That compares with the
company’s $1.06 billion estimate, done by Rothschild Inc.

Tronox filed an amended plan on Wednesday that it said has
the support of the official creditors committee, an ad hoc
committee of noteholders and the U.S. government, which has
brought environmental claims against the company.

Tronox and its attorneys at Kirkland & Ellis did not
immediately return a call for comment.


The Equity Committee said its plan would provide holders of
unsecured claims with 62.5 percent of the company, compared
with 16.9 percent under the company’s plan.

However, the company’s plan offered unsecured creditors the
opportunity to buy an additional 78.4 percent of the company’s
stock in a $170 million rights offering, leaving them with more
than 90 percent of the reorganized company.

The shareholders’ plan cuts the unsecured creditors’ rights
offering share to 17.5 percent, with an equal-sized rights
offering for stockholders. It expects to raise $135 million in
the share sale.

The equity committee estimated its plan provides $2.58 per
share of Tronox, while the company’s plan provides for 2 to 10
cents per share.

Tronox shares spiked as high as 44 cents each before paring
their gains to be up 26 percent at 34 cents in early afternoon
trading. The stock hit a year high of $1.45 in April.

In recent months, funds associated with Lagrange Capital
Partners, Centus Capital LLC and Ahab Capital Management Inc
have acquired more than 20 percent of Tronox’s stock, according
to regulatory filings.

The equity committee’s plan also allows for the sale of the
Tiwest joint venture in Australia, which it estimates could be
worth $260 million.

The company’s U.S. operations filed for protection from
creditors in January 2009, less than three years after
Kerr-McGee spun it off. Anadarko Petroleum Corp (APC.N: ) bought
Kerr-McGee for $18 billion after the spin-off. Tronox sued both
companies in May 2009, saying Kerr-McGee had saddled it with
environmental liabilities that set the company up to fail.

The U.S. government has brought environmental claims
against Tronox. Under both plans, Tronox would turn over most
of its claims against Kerr-McGee and Anadarko to the
government. Both plans will set up trusts to resolve
environmental and tort claims.

The equity committee is being represented by Pillsbury
Winthrop Shaw Pittman LLP.

The case is In re: Tronox Inc, U.S. Bankruptcy Court,
Southern District of New York, No. 09-10156.
(Additional reporting by Santosh Nadgir in Bangalore; Editing
by Martha Graybow and Tim Dobbyn)

UPDATE 2-Tronox shareholders’ plan opens value fight