Neville Prior

Cornelius Partner Tronox Reports on 2017

Neville Prior  2 March 2018 10:34:33 AM
Image:Cornelius Partner Tronox Reports on 2017
Chemical and minerals maker Tronox reported Thursday rising revenues and a loss for 2017, as it battles with federal regulators to get approval of a deal worth more than $1 billion. Net sales for 2017 reached about $1.7 billion, up 30 percent from 2016. The company incurred an annual loss of $285 million — a total that included $179 milllion in losses from discontinued operations and $48 million in expenses tied to its proposed $1.7 billion acquisition of the titanium dioxide business of Saudi Arabian firm Cristal. Contributing to the loss on discontinued operations, the company sold last September its alkali chemicals business for about $1.33 billion, a sum that will largely fund the titanium dioxide purchase. The company sustained a $61 million loss in 2016. In the fourth quarter, net sales rose 32 percent year-over-year, to $464 million. Its bottom line was break even, compared with a $121 million gain in the same period in 2016.

“We continued to build on the momentum generated in earlier quarters — momentum that we see continuing in 2018,” CEO and President Jeffry Quinn said in a statement. “Our titanium dioxide business delivered robust performance in the fourth quarter. … This high level of performance clearly reflects the benefits of our vertical integration, as both our pigment and mineral sands operations delivered strong revenue and profit growth.”

Also, Tronox and Cristal announced they had agreed to extend the end date for closing the titanium dioxide deal from May 21 to June 30. If necessary, three automatic three-month extensions would follow, until March 31, 2019, depending on pending regulatory approvals. Tronox would have to pay a $60 million termination fee, if either company walked away from the deal after March 31, 2019, should the deal not gain government backing, or if Tronox were to withdraw its offer after Dec. 31, in the event that it did not think it could secure the required authorizations. The agreement for the deal was originally announced in February 2017.

Tronox and Cristal announced the extension as litigation overshadows their pact. Tronox last month sued the FTC, arguing that the agency is resorting to improper tactics to block the acquisition. Company officials have said the FTC is relying solely on an administrative process that they said could not conclude before the acquisition agreement expires, a “thinly veiled attempt to run out the clock instead of resolving its concerns about the transaction on their merits.” An action in federal court would be necessary in the near future to promptly resolve the matter, they said. FTC officials have declined to comment on the lawsuit. While Tronox said the FTC is depending only on administrative moves to squash the deal, the FTC did sue the company last December over the transaction. In that complaint, FTC officials allege that the acquisition would violate antitrust laws by significantly reducing competition in the North American market for titanium dioxide. In response, Tronox officials have said the FTC’s complaint is based on flawed analysis of the market for titanium dioxide, a white pigment used in products including paint, industrial coatings, plastic and paper.
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