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Tronox Limited Message Board

  • eggplant101 eggplant101 Dec 12, 2013 10:14 PM Flag

    Anadarko news

    If APC loses their appeals, who gets the money?

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    • Correction on my previous analysis. A $5 billion payment to the grantor trust provides approx $1.75 billion (at a 35% tax rate) of tax benefits to TROX. These benefits occur as the environmental liabilities are remediated so there's a PV of that figure that's less. But assuming $1.75 billion is $15.48/share, and that the PV of that amount is $10.00/share, then TROX stock should start pricing in that extra $10.00/share, taking it close to $32/share (from $22ish now). This assumes the "settlement" or "judgment" is at the low end of $5 billion.

      Sentiment: Strong Buy

    • Tronox will receive no immediate or direct benefit from the Dec. 12 ruling. Instead, 88 percent of the judgment will go to trusts and other governmental entities to remediate polluted sites. The remaining 12 percent of any funds ultimately received will be distributed to a tort trust to compensate individuals injured as a result of Kerr-McGee's environmental failures."

      • 1 Reply to jpjm3
      • in actuality, the benefit that TROX would receive is as follows- when monies are actually expended from the trusts for remediation, TROX will run those expenses through its income statement as if they had spent the money, without having actually done so. It would be a large and ongoing tax break, if you will, as their taxable EPS would be much lower than actual EPS.. In theory, would allow them to buy assets at a higher price than others due to tax benefits down the road... but we're a long way from knowing the actual amounts, and then longer for the money to be spent......

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