Solutia Says Bankruptcy Exit Won't Be Delayed

St. Louis, MO, December 5, 2007--Solutia said that its exit from bankruptcy won't be delayed by a legal challenge by a group of bondholders who claim they're owed $73 million more than the company is paying them.

Dan Jenkins, a Solutia spokesman, said the company set up a $37.5 million reserve to pay the bondholders in case a U.S. District Court judge decides Solutia owes them more than the amount decided by a bankruptcy judge.

"The concerns of the...bondholders are being addressed and Solutia is moving forward to exit Chapter 11," Jenkins said. Jenkins said Solutia could exit bankruptcy as early as Dec. 28 said January was a more likely timeframe.

Solutia said it owes about $210 million to holders of its 11.25 percent senior secured notes due 2009. The bondholders said Solutia owes them about $283 million. The difference involves interest the bondholders would have collected had Solutia made payments through the maturity date of the bonds in 2009.

U.S. Bankruptcy Judge Prudence Carter Beatty ruled last month in favor of Solutia. Last week, the bondholders appealed her decision to the U.S. District Court in Manhattan.

Solutia has also agreed to pay the bondholders anything above the $37.5 million reserve amount if the district judge rules they're owed more than that amount, according to John Cunningham, attorney for the bondholders.

Solutia filed for Chapter 11 in December 2003 under a mountain of personal-injury and environmental contamination liability costs. Beatty last week confirmed the company's Chapter 11 plan, which calls for unsecured creditors to be repaid about 83 cents for every dollar they're owed.