Solutia delays emergence from Chapter 11

Solutia Inc. announced 23 January 2008 that the effective date of its confirmed plan of reorganization and its emergence from Chapter 11 would be delayed from the previously anticipated 25 January 200…

Solutia Inc. announced 23 January 2008 that the effective date of its confirmed plan of reorganization and its emergence from Chapter 11 would be delayed from the previously anticipated 25 January 2008 emergence date. As previously disclosed, Solutia“s plan of reorganization, which was confirmed on 29 November 2007, is subject to numerous closing conditions, including entering into an exit financing facility. The lead arrangers of Solutia“s exit financing (Citigroup Global Markets Inc. and certain of its affiliates, Goldman Sachs Credit Partners L.P., Deutsche Bank Trust Company Americas and Deutsche Bank Securities Inc.) informed Solutia yesterday that, in their view, due to continuing conditions in the credit markets, they have not been able to complete the exit financing they committed to on 25 October 2007. This exit financing consists of a USD 1.2 billion senior secured term loan facility, a USD 400 million senior secured asset-based revolving credit facility and USD 400 million aggregate principal amount of senior unsecured notes. Under the terms of the commitment, the lead arrangers of the exit financing have an obligation, subject to certain conditions, to provide the term loan facility, the revolving credit facility and, in case they are not able to successfully market the senior unsecured notes, a USD 400 million senior unsecured bridge facility. The commitment expires on 29 February 2008. One of the conditions of the lead arrangers“ obligations to provide these credit facilities is the absence of any adverse change since 25 October 2007 in the loan syndication, financial or capital markets generally that, in their reasonable judgment, materially impairs syndication of the proposed loan facilities. The lead arrangers have asserted that, this condition has not been satisfied. Solutia, however, believes that the ongoing conditions in the credit markets began long before 25 October 2007. Accordingly, Solutia believes that the lead arrangers are required to fund their commitments on or before 29 February 2008. Jeffry N. Quinn, the Chairman, President and Chief Executive Officer of Solutia, said “while we disagree with the position asserted by the lead arrangers, we intend to continue to work with them to successfully syndicate the exit facility”.