St. Louis, Jan. 29--The best outcome from Monsanto's standpoint of Solutia's Chapter 11 bankruptcy proceeding is for the chemical company to emerge as a "vibrant" business that can take care of its obligations, Monsanto Chairman and Chief Executive Hugh Grant said.
Speaking to reporters Thursday afternoon following Monsanto's annual meeting at its headquarters here, Grant said being "vibrant" includes a range of items, from Solutia being able to address its financial obligations to its place in the St. Louis business community.
Grant declined to say what he thinks will happen with Solutia's request to a federal court that a distribution agreement among Solutia, Monsanto and Pfizer's Pharmacia unit be rejected. He also declined to comment on how much of Solutia's post-retirement and health benefits and litigation and environmental remediation costs Monsanto ultimately may be forced to pay.
"To speculate today on where we'll be in June 2006 doesn't add much value," Grant said.
Solutia field for Chapter 11 bankruptcy protection in New York on Dec. 17. It cited mounting debt and liabilities it inherited when it was spun off from the Monsanto that existed in 1997.
Solutia asked the bankruptcy court when it filed for Chapter 11 to reject the distribution agreement that said it would be responsible for post-retirement and health benefits related to Monsanto retirees, litigation costs and environmental remediation costs it inherited when it was spun off.
The Monsanto that existed after Solutia's spinoff later merged with Pharmacia & Upjohn Inc. to form Pharmacia. Pharmacia later spun off the current Monsanto, and Pharmacia and the remaining old Monsanto were eventually purchased by Pfizer.
Monsanto still doesn't have any plans to set aside money in case the court decides it has to pay any of the costs in those three areas, Grant said. The litigation over polychlorinated biphenyls (PCBs) from a Solutia plant, once a Monsanto plant, in Anniston, Ala., was "more significant" to Monsanto than Solutia's bankruptcy, he said.
Residents in Anniston sued the companies, claiming that PCBs released from the plant made them ill and lowered their property values. Agreements with the plaintiffs were reached last year.
During the annual meeting, Grant told shareholders that the transformation from a company that relies heavily on its Roundup herbicide to one that depends much more on its seeds and traits business continues. Although Roundup's gross profit is declining, the gross profit from seeds and traits is rising, he said.
"The future of your company is in seeds and traits," Grant said.
Monsanto investors rejected two shareholder proposals and approved a third during the meeting. Shareholders approved a proposal requesting that they be allowed to vote on any adoption of a so-called poison pill, or shareholder rights plan. Of the votes cast, 57% were in favor of the proposal.
Monsanto doesn't have a poison pill, and the outcome of the vote won't alter the current policy, Grant said. But Grant added that he will tell the board of the vote outcome.
Shareholders also approved other items, including three director nominees who will be on the board until 2007. Those nominees include Frank V. AtLee, who was chairman of Monsanto from 2000 until 2003 and who was interim president and chief executive from December 2002 until May 2003. Of the votes cast, 78% voted in favor of the directors.
