Tronox seeks waiver from creditors on poor outlook

02 July 2008 16:37  [Source: ICIS news]

TORONTO (ICIS news)--Tronox is seeking a waiver from creditors due to unexpectedly tough business conditions in the second quarter, the US pigment maker said on Wednesday.

 

Rapid increases in process chemical, energy and transportation costs and production difficulties experienced in the second quarter were hurting results, it said.

 

Tronox requested a waiver to its financial covenants for the 2008 second quarter under a senior secured credit facility and also requested an amendment to its leverage ratio financial covenant for the remainder of the year, it said.

 

The company announced previously that second-quarter results would be impacted by production difficulties at its Uerdingen, Germany, and Kwinana, Western Australia, titanium dioxide (TiO2) facilities, in the range of approximately $10-12m.

 

In addition, higher natural gas costs at Kwinana due to curtailments of natural gas supplies after the shutdown of a natural gas processing facility in Western Australia were expected to impact second-quarter results in the range of $1.5-$2.5m, it said.

 

Tronox said it was able to implement a portion of announced price increases and was looking to further increases in the third quarter.

 

“As we move into the third quarter, we are continuing to see a trend of further price increases being implemented in all three regions of the world, which Tronox believes will help offset continuing TiO2 industry cost increases,” it said.

 

“There is no assurance, however, that these pricing trends will offset continuing cost increases that the company is unable to predict and that depend on numerous factors beyond its control," it added, however.

 

Tronox also said it completed the $12m sale of two parcels of land in Nevada and Oklahoma, with the proceeds going toward debt reduction.

 

To discuss issues facing the chemical industry go to ICIS connect

By: Stefan Baumgarten
+1 713 525 2653

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly