St. Louis, MO, Aug. 21--Solutia Inc. today announced a settlement resolving the Abernathy and Tolbert PCB litigation against the company in Alabama.
The settlement, which includes no admission of wrongdoing, will be funded by Solutia, Monsanto Co. and Pharmacia, a wholly-owned subsidiary of Pfizer and the companies' commercial insurers. It resolves all outstanding claims including potential punitive damages that might have been sought by plaintiffs and their lawyers. Solutia's portion of the settlement will be $50 million paid in equal installments over a period of ten years.
"We are glad to have this litigation behind us as it removes a burden for the company, its employees and stakeholders; and the community of Anniston, Alabama," said John C. Hunter, chairman and chief executive officer. "This settlement puts the company in a better position in the coming months to refinance its bank facility and to address upcoming bond maturities, pension funding obligations and other legacy liabilities."
Hunter added, "While there is substantial scientific evidence which demonstrates that exposure to PCBs does not cause serious long-term health impacts to people, continuing to battle these matters in the courts would have taken many years and would have continued to drain the resources of the company and the vibrancy of the Anniston community."
The settlement, which concludes these cases in state and federal court, respectively, resulted from mediation conducted by The Honorable U.W. Clemon, Senior Judge, United States District Court for the Northern District of Alabama, and The Honorable R. Joel Laird, jr., State Circuit Court Judge, Calhoun County, Alabama. Participants in the mediation included Solutia, Monsanto, Pharmacia and lawyers for the plaintiffs.
"We commend the judges for their professionalism and even-handedness in bringing about a resolution of these cases. We share their vision that by solving these matters, it will allow the community to begin a healing process," Hunter said.
The terms of the agreement were stipulated by all parties in a court session on Aug. 20 before the respective judges in the two cases. The settlement is subject to the parties entering into a final agreement and approval by the court which are expected by Aug. 26, with funds being transferred by Aug. 29.
The cash settlement totals $600 million, with Solutia's $50 million portion to be paid over time. Approximately $160 million of the cash settlement will be provided through the settling companies' commercial insurance. The remaining approximately $390 million will be provided by Monsanto.
In addition, as part of the settlement, Solutia arranged for a broad array of community health initiatives for low-income residents of Anniston and Calhoun County to be undertaken by Pfizer Corporation. These programs are valued at more than $75 million over the next 20 years.
Solutia has also agreed to issue Monsanto warrants to purchase 10 million shares of Solutia common stock. The warrants are exercisable if Solutia's common stock reaches a certain price target or upon a change-of-control of Solutia.
"Solutia and Monsanto Company, now known as Pharmacia, have acted responsibly as producers and employers in the Anniston, Alabama community. Solutia plans to remain an integral part of the community. Judge Clemon's recent approval of a Consent Decree between Solutia, the EPA and the Department of Justice allows the Company to proceed with an expedited residential cleanup in Anniston, while simultaneously developing a comprehensive cleanup plan for the community," Hunter noted.
For more information on Solutia's cleanup efforts, or its economic and community activities in Anniston, please visit www.solutia.com/Anniston.
