Tronox Limited has announced that it has signed a definitive agreement to sell its Alkali Chemicals business to Genesis Energy, L.P., a diversified midstream energy master limited partnership headquartered in Houston, Texas, for $1.325 billion in cash. The transaction is expected to close in the second half of 2017, subject to customary regulatory approvals and closing conditions.
Alkali Chemicals is the world's largest producer of natural soda ash with its mining and processing facilities located in Green River, Wyo. Alkali's products are used in glass manufacturing, detergents, baked goods, animal nutrition supplements, pharmaceuticals, and other essential products.
Peter Johnston, chief executive officer of Tronox, said: "We were pleased to have received significant interest in our Alkali business from multiple potential buyers. Genesis' proposal was the most compelling for its overall value, with its combination of price, favorable contract terms, speed to closing, committed financing, and expected ease of regulatory approvals. These considerations, in aggregate, provided the highest level of certainty to Tronox. We anticipate being able to close this transaction prior to our planned closing of the Cristal TiO2 acquisition.
"Alkali Chemicals has consistently delivered strong operational and financial performance. The caliber of the Alkali workforce and their commitment to safe, high-quality production are unmatched in the natural soda ash industry. I thank the leadership team and all Alkali employees for their contributions to Tronox," said Johnston.
The sale of Alkali Chemicals is the next step in positioning Tronox as the global leader in TiO2. The proceeds will be used to fund the majority portion of the cash consideration for the Cristal TiO2 acquisition, which is expected to close by the first quarter of 2018. As an integral part of this strategy, the company announced its intention to refinance a portion of its capital structure. Net debt leverage of approximately 4.5x trailing twelve months pro forma EBITDA before synergies is expected at the closing of the Cristal transaction.
Credit Suisse is acting as financial advisor to Tronox for both the Cristal and Alkali transactions and Kirkland & Ellis LLP and Willkie Farr & Gallagher LLP are Tronox's legal advisors.
Johnston said: "We see the momentum in our TiO2 business continuing across the balance of this year and expect to benefit from additional pigment selling price increases, favorable market conditions for titanium feedstock and co-products, and continued strong cost performance. We are confident that 2017 will be a year of strong performance and that 2018 will be a transformational one for Tronox. Cristal TiO2 integration planning is proceeding on schedule so that we can from day one begin to realize the substantial value creation enabled by our combination."
Tronox Limited operates two vertically integrated mining and inorganic chemical businesses. Tronox TiO2 mines and processes titanium ore, zircon and other minerals, and manufactures titanium dioxide pigments that add brightness and durability to paints, plastics, paper and other everyday products. Tronox Alkali mines trona ore and manufactures natural soda ash, sodium bicarbonate, caustic soda, and other compounds, which are used in the production of glass, detergents, baked goods, animal nutrition supplements, pharmaceuticals, and other essential products.