Laminated glass interlayers manufacturer Solutia is following two paths to reorganization and emergence from bankruptcy: one involves the potential sale of its equity to a third party and the other wo…
Laminated glass interlayers manufacturer Solutia is following two paths to reorganization and emergence from bankruptcy: one involves the potential sale of its equity to a third party and the other would grant bondholders shares in the company, according to a company official. Possible bidders for Solutia would be private equity firms, according to investment bankers. “I would not be surprised if financial sponsors and hedge funds saw an opportunity here”, said one source in the financial community. “Private equity firms would likely be taking a serious look”, said Jean Cayanni, senior managing director at RSM EquiCo. In a meeting with creditors in December 2006, Solutia proposed that bondholders exchange their debt for 36.52 million primary common shares and the chance to purchase 16.23 million shares in a rights offering.The proposal was a framework for continued negotiation and that the company had yet to file a revised reorganization plan with the bankruptcy court, said a Solutia official. Creditors and the bankruptcy judge would have to approve a reorganization plan before the company could emerge from bankruptcy, the official said. Solutia filed for bankruptcy protection in December 2003 and filed its reorganization plan in February 2006. In a recent filing with the Securities and Exchange Commission, the company detailed its efforts to find a buyer for the firm. Such a sale would also fund the company“s reorganization, the official said. Solutia said it made presentations to 18 potential strategic and financial purchasers, and requested replies from interested parties notify by 19 December 2006. The official declined to say how many replied before the deadline. He also said the company does not have a preference for either the sale or share redistribution options. “Our duty as the bankrupt company is to maximize the value of the estate for our creditors, so that“s really what we“re focused on”. St. Louis, Missouri.-based Solutia makes performance films for laminated safety glass, water treatment chemicals, heat-transfer fluids and nylon products. In the first three quarters of 2006, Solutia posted 4% higher sales of USD 2.18 billion and a 32% improvement in operating income to USD 102 million.