Shares of Solutia. a specialty chemicals company based in St. Louis, which have traded for less than $1 since June 2005, plunged more than 24 percent to close at a 52-week low of 10.2 cents in over-the-counter trading on Wednesday.
The underwriters, including units of Citigroup, Goldman Sachs and Deutsche Bank, invoked a "materially adverse change," a contract provision known as a MAC clause, that kept them from selling the loans, Solutia spokesman Dan Jenkins said.
While the company disagreed with the underwriters' position, "We intend to continue to work with them to successfully syndicate the exit facility," said Solutia Chairman and Chief Executive Jeffry Quinn in a statement.
The delayed deal has ramifications for recoveries throughout the capital markets and for companies that go into default, said Matthew Dundon, head of research at Miller Tabak Roberts Securities.
"An obvious conclusion is the market is demanding better terms and higher spreads now than it was then," Dundon said.