Solutia Shareholders Seek End of Exclusivity Perio

New York, NY, July 25, 2007—Solutia shareholders say they're "ready, willing and able" to come up with a reorganization plan superior to the chemical company's own, and are asking a bankruptcy court to clear the way for them to do so.

The official committee representing shareholders in Solutia's Chapter 11 bankruptcy case on Monday asked the court to end Solutia's exclusive control over its bankruptcy reorganization, a move that would let the shareholders file their own restructuring proposal for the company.

"The time has come to finally allow other stakeholders to propose confirmable, alternative plans," the shareholder committee said in court papers.

Solutia, which sought Chapter 11 protection in 2003, has asked the court for a four-month extension of its exclusive right to file a reorganization plan and to win creditor support for it. The extension would allow the company to keep control over its case through at least Dec. 31. Without the extension, Solutia's exclusive control would end next Monday.

The company is trying to win court approval to send its Chapter 11 plan to creditors for a vote, but Judge Prudence Carter Beatty of the U.S. Bankruptcy Court in Manhattan has expressed concern that the plan's disclosure statement -- a plain-language description of the plan -- doesn't give creditors a clear enough picture of the reorganization proposal. Beatty must approve the statement before creditors can begin voting on the reorganization plan.

A court hearing on the disclosure statement is slated to resume Thursday. Beatty will also consider Solutia's request for an extension at the hearing.

The shareholders committee said Solutia appears "unable to propose a disclosure statement that provides adequate information to creditors and other parties in interest." The panel said the statement includes "misleading" information about the plan and Solutia's proposed settlement with former parent Monsanto Co., a cornerstone of the reorganization plan.

"The debtors' exclusive periods should not be extended once again for an incredible twelfth time," the committee said.

A spokesman for Solutia, however, said the company is working to resolve objections to the disclosure statement and to address Beatty's concerns.

"We have been and continue to work with the constituents to resolve their objections," spokesman Dan Jenkins said. "What we're driving toward is an amended disclosure statement that really has been improved for all the constituents."

St. Louis-based Solutia was spun off from Monsanto in 1997. Solutia's settlement with its former parent would give Monsanto 20 percent of the equity in the reorganized Solutia in exchange for a $200 million payment to cover cleanup costs and a promise to cover costs from future lawsuits arising from its chemical business before the spin-off.

Solutia's Chapter 11 plan would repay unsecured creditors and bondholders, owed some $800 million, about 85 cents for every dollar they're owed. The creditors will also receive shares in the reorganized company. Shareholders are to receive warrants to buy up to 3.5 percent of Solutia's post-bankruptcy stock at a strike price of $14.16 a share.

The shareholder group called the Monsanto settlement "wholly unfair" and said Solutia's plan undervalues the company and would allow its noteholders, unsecured creditors and Monsanto to "reap an unconscionable windfall when Solutia's true value is realized after its reorganization."

Solutia filed for bankruptcy protection in December 2003, listing assets of $2.85 billion and debts of $3.22 billion. After it spun off Solutia in 1997, Monsanto merged into Pharmacia Corp. in early 2000. Pharmacia spun off its agricultural business as Monsanto in 2002 and in 2003 the pharmaceutical aspect of the company was acquired by Pfizer Inc.