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Venator Tronox

TiO2 makers head for court over unpaid fee

Venator Materials, a global supplier of pigments and performance additives, has started a lawsuit against Tronox in the Delaware Superior Court, claiming that Tronox has refused to honour a contract to pay a $75 million ‘break fee’ for the termination of the proposed sale of Cristal’s North American titanium dioxide (TiO2) business. Tronox has retorted that it is not obliged to do so because Venator did not negotiate in good faith.

The US Federal Trade Commission (FTC) had required Tronox to sell the assets at Ashtabula, Ohio, in order to resolve competition concerns arising from its proposed merger with Cristal. It entered into talks with UK-based Venator but in the end sold the operation to Ineos, although it did complete the much smaller sale of the 8120 paper-laminate product grade to Venator in order to win approval of the deal in the EU.

Venator president and CEO Simon Turner said that Tronox “has failed to honour its contract with Venator and offers baseless excuses for its refusal to perform”. Tronox, he added, had abruptly terminated bilateral discussions to pursue an alternative transaction while Venator was preparing to respond to the FTC’s concerns. The break fee was due to be paid on 13 May. Venator is also demanding payment of pre- and post-judgement interest and legal fees and costs. However, Jeffry Quinn, chairman and CEO of

Tronox, which is the world’s largest vertically integrated producer of the white pigment, counter-alleged that Venator failed to adhere to the terms of the memorandum of understanding (MoU) between the two, which envisaged a $1.1 billion deal. This ultimately forced Tronox to accept a much lower bid of $700 million from Ineos, which, he said, obviates any requirement to pay the break fee.

“Despite our fundamental disagreement over the consequences of Venator’s actions under the MoU, it is our hope to resolve this matter through negotiation, but are prepared to defend our position if necessary,” added Quinn. “Tronox will instead continue to focus on unlocking the substantial value created by our transformative acquisition of Cristal for the benefit of our shareholders, customers and employees.”

The sale of the 8120 grade, which was agreed in July 2018 along with the break fee, was completed on 10 April. Of €8 million fee, €1 million has been paid already and the rest will be paid in even instalments in Q2 2020 and Q2 2021. A transitional supply agreement is in effect until the manufacturing transfer is completed. The sale of the Cristal operations to Ineos was completed on 1 May.

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