Solutia Sells Nylon Business To PE Firm

St. Louis, MO, April 1, 2009--Solutia Inc. said  it will sell its nylon business to an affiliate of SK Capital Partners II, L.P., a New York-based private equity firm that is focused on the chemical, material and health care sectors.

At the closing of the sale, Solutia will receive $50 million in cash and a two percent equity stake in a new company formed to hold substantially all of the assets of the nylon business.

Solutia will also receive $4 million in deferred cash payments to be paid in annual $1 million installments beginning in 2011. The agreement includes a minimum level of working capital to be delivered at closing, which is approximately $100 million lower than the actual reported balance at the end of 2008 and approximately $25 million lower than the expected balance at the end of the first quarter.

The affiliate of SK Capital will assume substantially all of the liabilities of the nylon business, including employee and pension liabilities relating to the active employees of the business, and environmental liabilities. Solutia will use the nylon sale proceeds to pay down debt under its asset-based revolving credit facility.

In addition, SK Capital will secure replacement of $25 million of letters of credit associated with the nylon business, which will result in increased availability for Solutia under its credit agreements.

“Following this divestiture, Solutia will have completed its transformation into a pure-play performance materials and specialty chemicals company, with a portfolio of high-value products with world-leading positions,” said Jeffry N. Quinn, chairman, president, and CEO of Solutia Inc. “Solutia is well positioned to generate consistent financial returns and to further develop and enhance its portfolio in the specialty chemicals sector.”

The nylon business sale includes the business’ management and employees, as well as all five of its manufacturing plants: Alvin, Texas (Chocolate Bayou); Decatur, Ala.; Greenwood, S.C.; Pensacola, Fla.; and Foley, Ala.

Solutia Inc.'s integrated nylon business is a world leader in proprietary technologies that are central to the production of nylon, plastics and synthetic fibers, as well as agricultural products, animal feed and personal care products.