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Solutia Inc. Files Plan of Reorganization and Disclosure Statement
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Solutia Inc. manufacturer and provider of interlayers for laminated glass, aftermarket window films, specialty chemicals and an integrated family of nylon products, today announced it has filed its Plan of Reorganization and Disclosure Statement with the Bankruptcy Court for the Southern District of New York. The filing of the Plan of Reorganization was supported by the Official Committee of Unsecured Creditors (the "Creditors Committee"), Monsanto Company (NYSE: MON) ("Monsanto"), Pharmacia Corporation ("Pharmacia"), and the Official Committee of Retirees (the "Retirees Committee").
"While we still have much to do in order to complete this process, filing our Plan of Reorganization takes us one significant step closer to successfully reorganizing Solutia," said Jeffry N. Quinn, president and CEO, Solutia Inc. "This Plan of Reorganization will enable Solutia to emerge from Chapter 11 later this year with an improved competitive position."
Relief from Legacy Liabilities
The Plan of Reorganization will provide Solutia with significant relief from the legacy liabilities it was required to assume when spun off from Pharmacia (formerly known as Monsanto) in 1997 ("The Solutia Spinoff"). These legacy liabilities include: 1.) retiree medical, retiree life insurance, and disability benefits ("Retiree Welfare Benefits") for those individuals whom retired or became disabled prior to The Solutia Spinoff ("Pre-Spin Retirees"); 2.) environmental remediation costs related to activities of the chemicals business of Pharmacia that occurred prior to The Solutia Spinoff; and 3.) toxic tort litigation costs relating to chemical exposure associated with the activities of Pharmacia that occurred prior to The Solutia Spinoff.
"After many months of complex negotiations, we have filed a Plan of Reorganization with the support of our Creditors Committee, Monsanto, Pharmacia and the Retirees Committee," said Quinn. "Through the contributions of these parties, and Monsanto in particular, we will improve our cost structure, strengthen our balance sheet, and greatly reduce the risk profile of the company. Importantly, we will do so while ensuring all environmental remediation commitments will be met, securing and providing significant funding for retiree welfare benefits, and preserving the pension plan."
$250 Million of New Investment
The Plan of Reorganization provides for $250 million of new investment in Reorganized Solutia. This investment will be in the form of a rights offering to certain unsecured creditors, whom will be given the opportunity to purchase 22.7% of the common stock in the reorganized company. Monsanto will backstop the rights offering, meaning it will commit to purchase up to the entire $250 million of stock, thereby making up for any amount of the rights offering left unsubscribed by the unsecured creditors. Of this $250 million, $175 million will be set aside in a Voluntary Employees' Beneficiary Association (VEBA) Retiree Trust to fund the Retiree Welfare Benefits for those Pre-Spin Retirees whom receive these benefits from Solutia; $50 million will be used by Reorganized Solutia to fund its environmental remediation commitments in Anniston, Ala., and Sauget, Ill.; and $25 million will be used by Reorganized Solutia to pay for any of the legacy liabilities that are being retained by the company.
Relief from Tort Litigation and Environmental Remediation Liabilities
Under the Plan of Reorganization, as between it and Solutia, Monsanto also will assume financial responsibilities in the areas of tort litigation and environmental remediation.
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February 17th, 2006
Source: Solutia.com |
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