- A federal bankruptcy judge’s ruling that Anadarko Petroleum (APC) may have to pay up to $14.2B in damages related to the Tronox spinoff shocked Wall Street, as investors erased nearly $4B from APC’s market cap Friday.
- U.S. officials say the award would be the largest ever in a bankruptcy case for federal environmental claims and liabilities, and it ranks among the largest environmental enforcement awards in U.S. history.
- A likely appeal could bring years of legal wrangling, prompting calls for a settlement, which is perhaps what the judge is attempting to motivate; otherwise, APC faces a substantial overhang on its stock price - possibly for as long as 10 years, Citigroup says.
- The ruling ruined APC’s own $1.4B estimate of exposure in the case; if more money is needed to cover damages, APC could sell low cash-generating assets in Mozambique, Brazil and elsewhere for a combined $18B, leaving it with excess cash even in the face of a large judgment, Tudor Pickering says.
- Even a worst-case scenario isn't likely to torpedo APC, but the next question may be whether it might be weak enough to draw an unsolicited takeover bid.
It could get worse before it gets better at Anadarko after $4B market cap hit
Dec 14 2013, 08:25 ET