Solutia to issue warrants, notes due 2009

As part of its refinancing plan, Solutia, Inc. reported on 2 July that it expects to issue through a private placement 223,000 units consisting of US$ 223 million of senior secured notes due 2009 an…

As part of its refinancing plan, Solutia, Inc. reported on 2 July that it expects to issue through a private placement 223,000 units consisting of US$ 223 million of senior secured notes due 2009 and warrants to purchase its common stock. The notes were priced at 89.992% of the principal amount and will generate gross cash proceeds of about US$ 200 million with a coupon on 11.25% and a yield to maturity of 13.5%, the company said. Holders of the notes will also receive warrants for the purchase of 5,533,503 shares of Solutia common stock at a strike price of US$ 7.59 per share. Solutia intends to use the offering“s net proceeds to repay its US$ 150 million 6.5% notes due on 15 Oct 2002 and to repay a portion of its outstanding bank debt, the company said. The offering is expected to close on 9 July. The notes will be issued by SOI Funding Corp, a special purpose entity that will place the proceeds into escrow pending the assumption of the notes by the company in conjunction with the successful extension of its revolving credit facility currently scheduled to expire on 13 August 2002.