St. Louis, MO, Dec. 19--Solutia Inc. edged closer Thursday evening to gaining access to $75 million in bankruptcy financing, with the judge overseeing the specialty chemicals maker's newly filed Chapter 11 case indicating she will give her approval during a Friday hearing.
When Solutia announced its bankruptcy filing Wednesday, the St. Louis firm said it had arranged $500 million in financing from a syndicate of lenders led by Ableco Finance LLC, Congress Financial Group and Wells Fargo Foothill. Using that credit, Solutia will pay off a $350 million bank facility that it entered into in October and use the remaining $150 million to fund its business while operating under bankruptcy-court protection.
Without this so-called debtor-in-possession funding, Solutia's financial standing is precarious. During the Thursday hearing, Solutia attorney Conor D. Reilly said the firm's liquidity has dwindled to about $20 million.
As is customary in bankruptcy cases, U.S. Bankruptcy Judge Prudence Carter Beatty plans to give Solutia the ability to use only some--$75 million--of the $150 million in DIP financing left over after the bank facility is paid off until a later hearing, which was set for January. At that later hearing, Judge Beatty will determine whether Solutia can use all $150 million.
Also during Thursday's hearing, Judge Beatty agreed to a slew of motions filed by the company, including Solutia's request to pay employees and important vendors money owed from before the firm's bankruptcy filing, amounting to more than $10 million.
