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Solutia delays emergence from Chapter 11

On Wednesday, January 23, Solutia Inc. announced that its emergence from Chapter 11 bankruptcy will be delayed from the previously announced effective date of January 28, 2008. The delay was caused by problems in obtaining the necessary exit financing, a result of current conditions in financial markets. Solutia’s exit financing consists of a $1.2 billion senior secured term loan facility, a $400 million senior secured asset-based revolving credit facility, and $400 million aggregate principal amount of senior unsecured notes.

The lead arrangers of Solutia’s exit financing — Citigroup Global Markets, Goldman Sachs Credit Partners, and Deutsche Bank — informed Solutia on January 22, 2008 that they have been unable to complete the exit financing to which they committed on October 25, 2007. The lead arrangers contend that the failure to provide these credit facilities was the result of an adverse change in the capital markets since the agreement in October. Solutia, however, said that it believes that the ongoing conditions in the credit markets began long before the October agreement and that the lead arrangers therefore are required to fund their commitments themselves on or before February 29, 2008.

Solutia’s press release is here.

Solutia’s most recent Plan of Reorganization is here.

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