Solutia & Monsanto JV serve the framework for Solutia's plan of reorganization
07 Jun '05
6 min read
The purchase price for this stock may or may not coincide with market value or with the reorganization value of the company as determined by the Bankruptcy Court. Monsanto will backstop the rights offering (i.e. exercise the remaining rights if the offering is not fully subscribed). Of the proceeds from the rights offering, $200 million will be used post-emergence to satisfy specific liabilities as described below, and the remaining $50 million will be used post-emergence at the discretion of the reorganized company to provide additional funding for satisfaction of those liabilities.
The liabilities Solutia assumed at the time it was spun off from Pharmacia Corporation included retiree benefit obligations, environmental remediation and litigation. The agreement-in-principle addresses these liabilities as follows:
1) Pre-Spin retiree benefit obligations: $150 million of the proceeds from the rights offering will be used to satisfy, in part, retiree medical, disability and life insurance benefits of those individuals who receive these benefits from Solutia but who retired prior to the spinoff.
2) Environmental remediation:
* Sites Never Owned or Operated By Solutia. Monsanto will be responsible for paying the remediation costs related to these sites.
* Anniston and Sauget Off-Site Environmental Remediation. $50 million of the proceeds from the rights offering would be used for off-site remediation in Anniston, Abe responsible for paying the remediation costs related to these sites.
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