High Oil Prices Pushing Solutia To Sell Nylon Biz

Pensacola, FL, July 2, 2008--Jonathon Wright, senior vice president of Solutia Inc. and president of the company's integrated nylon division, told a Pensacola newspaper Tuesday that the price of raw materials is the driving factor in the company's decision to look for a buyer for its nylon business.

Solutia said earlier this week that it has hired HSBC Securities to investigate the sale prospects.

Wright noted that in 2002 the price of oil was $17.50 but now it's over $140.

"We have no option in the nylon business but to pass through these costs to our customers," he said.

"So, when you look at the nylon business strategically going forward, you have to ask: Is there a different capital ownership structure that would be better for the nylon division?"

Wright said the business will need a significant infusion of capital to remain competitive, and that the nylon business, which is quite different from other Solutia products, might not be the best fit for the company.

"The cost of the raw materials it takes to manufacturer this product is becoming a drain on Solutia's other businesses," Wright said.

"And the characteristics of the nylon division are very different from the other products we make. If the price of oil went back to 2002 levels, then the nylon division would be more profitable, and we probably would think about staying in the business.