On 9 July, US chemical, fibre and polymer manufacturer Solutia, Inc., completed the sale of US$ 223 million in high-yield secured notes. Though the price was relatively high – with a coupon rate of 11…
On 9 July, US chemical, fibre and polymer manufacturer Solutia, Inc., completed the sale of US$ 223 million in high-yield secured notes. Though the price was relatively high – with a coupon rate of 11.25% and a yield to maturity of 13.5% – the transaction was key to the company“s plan to refinance its revolving banking agreements, analysts have said. Solutia intends to use US$ 150 million of the US$ 200 million proceeds to pay off a bond issue that is due to mature in October, five years after the company spun off from Monsanto Co. The other US$ 50 million will go toward bank debt, which was US$ 450 million after the first quarter. “What“s important to the banks is that we found a way to get other investors to lend us US$ 200 million, which allows us to pay down that October maturity,” said Robert Clausen, chief financial officer. “We don“t have anything else maturing until September 2004,” he said. “That makes the banks, and us, feel a lot better.” Solutia started corporate life with about US$ 1.5 billion in debts, Clausen said. Since then, it has spent almost US$ 1 billion for new businesses – CPFilms, Inc., which makes a coated film for windows; Amcis AG and CarboGen Laboratories, private Swiss companies that provide pharmaceutical services; and Vianova Resins AG, a German company. The company owes about US$ 400 million to a group of banks in the US, Europe and Asia under a five-year revolving-credit agreement that expires on 13 August.