Solutia Announces Completion of $1,150 Million Senior Secured Credit Facility

The Term Loan was issued at 99.5% of the principal amount and initial pricing is LIBOR plus 3.25 percent with a 1.50 percent floor, for a current coupon of 4.75 percent versus 7.25 percent under Solutia's existing term loan. Initial pricing on the Revolver is LIBOR plus 3.50 percent, with no LIBOR floor. Additionally, the interest spread on the Term Loan and Revolver is subject to a step-down based on net leverage as defined in the Credit Facility. The Credit Facility is guaranteed by Solutia's material U. S. subsidiaries.
 
The proceeds of the new Term Loan and existing cash on the balance sheet will be used to repay Solutia's existing $876 million term loan. The Revolver will replace Solutia's existing asset backed revolver, will be undrawn at close and will provide additional liquidity for the company.
 
"We are pleased that the refinancing will significantly lower interest costs, extend our earliest debt maturities into 2015, and increase both operational and strategic flexibility," said James M. Sullivan, executive vice president and chief financial officer. "Given the strong interest in the Term Loan, we were able to upsize it from $750 million to $850 million at attractive rates with the additional proceeds used to improve the funded status of our frozen U.S. pension plan and to bolster liquidity in support of our strategic growth plans."
 
Deutsche Bank Securities Inc., Jefferies Finance LLC, Citigroup Global Markets Inc., HSBC Securities (USA) Inc. and J.P. Morgan Securities Inc. are acting as joint lead arrangers and joint bookrunners on the refinancing.