Anadarko Petroleum and Kerr-McGee Corp. behaved improperly in their 2006 merger and should be held responsible for at least some of Kerr-McGee spinoff Tronox Ltd.'s billions of dollars in environmental liabilities, a U.S. Bankruptcy Court judge ruled Thursday.
U.S. Bankruptcy Court Judge Allan Gropper held in his 166-page opinion issued Thursday that Kerr-McGee foisted responsibility for 85 years worth of polluted Kerr-McGee sites onto Tronox to make the company a more attractive candidate to sell to a larger company like Anadarko.
Houston-based Anadarko could be held liable for damages between $5 billion to $14 billion in the case, plus attorneys' fees and other costs, but the judge will allow Anadarko and Kerr-McGee to argue whether the damages should be partially offset before assessing a final number, the opinion said.
Gropper levied the opinion one year to the day after the close of a seven-month trial in the case ended in a federal bankruptcy court in New York in December 2012.
Bud Grebey, a spokesman for Tronox, said the company could not immediately comment, as it was still evaluating the court's ruling on Thursday night.
“Given the significant factual evidence supporting our position, we vehemently disagree with the Judge's Memorandum of Opinion, and we fully expect to pursue every avenue available to us through the appellate process to protect the interests of our stakeholders, once a final judgment including damages has been rendered,” said Al Walker, Anadarko chairman, president and CEO.
Shares in Anadarko fell more than 9 percent Thursday night in after-hours trading after news of the ruling broke.
Kerr-McGee spun off its chemical business into Tronox in 2005, and then sold itself in 2006 for $16.5 billion in cash, plus the assumption of $2.6 billion in debt.
Tronox claimed it was insolvent soon after the spinoff and filed for Chapter 11 bankruptcy in January 2009.
Sites in 22 states
The chemical manufacturer moved to sue Anadarko in bankruptcy court, claiming Kerr-McGee shoveled decades worth of environmental liabilities onto Tronox before selling itself to Anadarko.
The liabilities Kerr-McGee transferred to Tronox included contaminated sites in 22 states, including the former Kerr-McGee Cimarron nuclear fuel processing plant near Cushing.
Tronox moved its corporate headquarters from Oklahoma City to Stamford, Conn., in 2012, but still maintains an administrative office near NW 150 and Portland in Oklahoma City.