Shares of Anadarko Petroleum Corp fell as much as 5.2 percent and then recovered less than 1 percent on Thursday following the company’s failure to settle a $25 billion lawsuit brought by Tronox inc. The trial in the case would resume next week. Shares were affected as a settlement in the big lawsuit would have clarified the future.
Tronox, which emerged from Chapter 11 bankruptcy in February 2011 has alleged that it had been saddled with liabilities when it was spun off in 2005 by Kerr-McGee Corp, and the liabilities had ultimately led to Tronox’s bankruptcy. Kerr-McGee Corp was later purchased by Anadarko. Tronox is supported in its claims by the U.S. Environmental Protection Agency, and says Anadarko should pay for environmental cleanup at more than 2,000 polluted U.S. sites.
John Hueston, a partner at Irell & Manella, which is representing the United States and Tronox, told the media “There is no settlement agreement, and we are proceeding with trial on Tuesday.” The nonjury trial had been put on hold since July 12 to reach a settlement.
Anadarko, which is based in The Woodlands, Texas, claims that there was no fraud and the problems of Tronox were linked to the U.S. housing slump and the recession. A spokesman for Anadarko, John Christiansen, said, “We remain committed to resolving the Tronox litigation through informal negotiations or other alternative dispute resolution mechanisms.”
While the plaintiffs have asked for $25 billion, Anadarko is learnt to have set aside $525 million for a settlement. Tronox makes titanium dioxide used in paints and seeks $15 billion of assets and $10 billion of interest from Anadarko.
Analysts said the market reaction was only mildly negative for Anadarko stock, but happened because the market expected a friendly settlement.