Solutia Poised to Emerge From Bankruptcy
"I am extremely pleased to announce today that we have reached a comprehensive settlement with all of the major constituents in our bankruptcy case that will form the basis for a revised consensual plan of reorganization that will be filed within the next few days," said Jeffry N. Quinn, chairman, president and chief executive officer of Solutia Inc.
"The revised plan will position Solutia to emerge from bankruptcy by the end of this year as a financially healthy organization well-positioned to create significant value for its stakeholders."
The revised plan will provide for $250 million of new investment in a reorganized Solutia through a backstopped rights offering to certain creditors, as well as a reallocation of the legacy liabilities that Solutia assumed when it was spun off.
The company also said it will provide for a resolution of all litigation.
"Since beginning the chapter 11 process, we have concentrated on the implementation of a reorganization strategy focused on enhancing our financial and operating performance, changing our portfolio so that it consists of high potential businesses, and achieving a reallocation of legacy liabilities," Quinn said.
Despite the recent turbulence in the debt capital markets, the company said it should be able to secure financing for the plan.
Of the $250 million in new investment, $175 million will be set aside in a Voluntary Employees' Beneficiary Association (VEBA) Retiree Trust to fund the retiree welfare benefits for those pre-spin retirees whom receive these benefits from Solutia; and $75 million will be used by Solutia to pay for other legacy liabilities.
Monsanto will be responsible for tort litigation and environmental remediation.