An order approving interim DIP financing was entered by the U.S. Bankruptcy Court on Dec. 19, 2003.
On Jan. 5, 2004, the Office of the U.S. Trustee announced the selection of a Creditors' Committee for Solutia's chapter 11 proceedings. That Committee, upon being formed and having chosen legal and financial advisors, requested that Solutia adjourn the hearing on final DIP financing to give the Creditors' Committee and its advisors time to study the proposed financing and to comment thereon. In light of Solutia's current liquidity of approximately $170 million (of which $140 million is in the United States), Solutia agreed to request a brief adjournment and the Court adjourned the hearing to Jan. 16.
As a result of the interim DIP approval, Solutia has received expressions of interest in providing final DIP financing from a number of financial institutions which had previously elected not to submit a financing proposal to the Company. These expressions of interest contemplate a financing which appears to be on more favorable terms to Solutia than that currently proposed by the existing DIP lenders. As required by its fiduciary duties under the Bankruptcy Code, Solutia intends to use the time leading up to the final hearing on Jan. 16 to investigate such possibilities to determine if there are alternative financing arrangements available on the required timetable which are more favorable to it than the currently proposed DIP financing with the interim DIP lenders and to then seek Court approval on Jan. 16 of the best final DIP financing available to it.