(Adds comments by Tasnee's CEO)
Feb 21 (Reuters) - Chemical maker Tronox Ltd announced plans on Tuesday to buy the titanium dioxide business of Cristal, a subsidiary of Saudi Arabia's Tasnee, for $1.67 billion cash and new shares.
The deal would make Tronox the world's largest producer of the whitening pigment, operating 11 titanium dioxide plants in eight countries with total capacity of 1.3 million tonnes per year.
Cristal will hold a 24 percent stake in the new Tronox, which will include the expanded pigments unit.
The deal will help Cristal pay its outstanding bank debt of $1.673 billion in Saudi Arabia, Tronox said in a statement.
Those banks include The Saudi British Bank, an affiliate of HSBC Holdings, Banque Saudi Fransi, Riyad Bank and Alawwal Bank, Mutlaq al-Morished, the CEO of Tasnee told Al Arabiya TV.
"We have reached this agreement through a comprehensive evaluation of the entire assets of Cristal. We preferred to get just the equivalence of the value of the debt of Cristal while the remaining value of the deal will be transferred into shares."
Tronox said the cash portion of the deal is expected to be partly funded through the sale of the alkali business and other non-core assets.
Tronox expects the deal to close before the first quarter of 2018, subject to regulatory approvals, it said.
Cristal will also get two of Tronox's nine board seats.
Credit Suisse was Tronox's financial adviser. Kirkland & Ellis LLP and Willkie Farr & Gallagher LLP were its legal advisers.
Tronox said it intends to acquire Cristal's titanium slag production facility in Jizan, southern Saudi Arabia.
Cristal is owned 79 percent by Tasnee and 20 percent by Gulf Investment Corporation (GIC), which is equally owned by the six states of the Gulf Cooperation Council (GCC) and is headquartered in Kuwait.
(Reporting by Komal Khettry in Bengaluru and Reem Shamseddine, Writing by Reem Shamseddine; Editing by Shounak Dasgupta/Ruth Pitchford)