Exhibit 99(b)
[Solutia Letterhead]
FOR IMMEDIATE RELEASE
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Contacts: Media - Glenn Ruskin - 314-674-4078
Financial - Marleen Judge - 314-674-7777
SOLUTIA REACHES AGREEMENT WITH EURO NOTE
BONDHOLDERS TO PERMIT U.S. CHAPTER 11 FILING
ST. LOUIS, Dec. 17, 2003/PRNewswire-FirstCall/ -- Solutia Inc.
(NYSE:SOI), announced today that it and its subsidiary, Solutia Europe
SA/NV, have reached agreement with the holders of approximately two-thirds
of the aggregate principal amount outstanding of the 6.25% Euro Notes, due
in 2005 to restructure those Euro Notes in a way that would remove a
potential filing by Solutia Inc. and its domestic subsidiaries for relief
under Chapter 11 of the United States Bankruptcy Code as an event which
would accelerate the Euro Notes. This change would allow Solutia Europe to
continue normal operations and not be forced to file for reorganization
under Chapter 11 or under the laws of its country of incorporation, Belgium,
if the parent company and its domestic subsidiaries were to file. The Euro
Notes are issued by Solutia Europe and were guaranteed by Solutia Inc. and
aggregate 200 million Euros in principal amount.
Solutia and the Euro Note holders have agreed to modify the Euro
Notes in the following manner:
1. Cross default provisions in the Euro Notes that would result in
default and acceleration of the Euro Notes upon the filing of a
Chapter 11 proceeding by Solutia Inc. will be eliminated.
2. The maturity of the notes will be extended to Dec.15, 2008 from
the current Feb.15, 2005.
3. Interest on the notes will be paid at the rate of 10% per annum,
payable semi-annually.
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4. Holders of the Euro Notes will be granted security interests in
substantially all of the assets of Solutia Europe and its
subsidiaries, which will also guarantee the Euro Notes.
5. Partial redemption of the Euro Notes as a result of permitted
asset sales will be allowed. Full redemption will be barred for 18
months; thereafter, full redemption will be allowed at 105% of
principal for the next year, 103% of principal for the year
thereafter, 101% of principal for the year after that and at par
thereafter.
6. Covenants will be implemented which will have the effect of
limiting the ability of Solutia Europe and its subsidiaries to
transfer assets or cash out of those entities until the Euro Notes
are paid.
7. Solutia Europe will agree to certain financial reporting
requirements and to indemnify Euro Note holders against certain
liabilities.
This agreement will be implemented in a two step procedure, the
first step of which has already occurred. In the first step, which was
completed on Dec.16, 2003 at a meeting of Euro Note holders held in
Brussels, the required percentage of Euro Note holders adopted resolutions
which eliminate through Jan.30, 2004 the ability to accelerate and default
the Euro Notes because of a Chapter 11 filing by Solutia Inc. In
consideration for that agreement, Solutia Europe is today making an
additional interest payment to the Euro Note holders of approximately 1.3
million Euros.
The second step will be implemented in a second meeting of Euro
Note holders to be held in Brussels no later than Jan. 29, 2004.
Jeffry N. Quinn, Senior Vice President and Chief Restructuring
Officer of Solutia Inc., commented as follows on the agreement: "We believe
that we have reached an agreement with the holders of Solutia Europe's Euro
Notes that is mutually beneficial for both the holders of those notes and
for Solutia. The facts that have led Solutia Inc. and its domestic
subsidiaries to consider filing petitions under Chapter 11 do not apply
equally to Solutia Europe and to Solutia's other overseas operations. The
non-US operations are not directly burdened by the legacy liabilities
imposed on Solutia Inc. at its creation by the former Monsanto Company and
are
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healthy, cash flow positive businesses. We therefore do not believe that
Solutia Europe or the other overseas subsidiaries of Solutia need to file
for reorganization, but the cross default provisions of the Euro Notes would
have required them to do so upon a filing by Solutia Inc. By eliminating
that cross default, the European and other overseas operations of Solutia
can continue their businesses unaffected by a potential U.S. Chapter 11
proceeding.
"We think this amendment is in the best interests of the customers,
vendors and creditors of both our overseas and domestic operations. Further,
by extending the maturity of the Euro Notes by over 30 months, we have given
ourselves time to finalize a potential reorganization in the United States
and to then deal with the maturity of the Euro Notes. From the point of view
of the Euro Note holders, we believe the concessions we have made to them in
terms of interest rate, security, redemption protection and covenants fairly
compensate them for their concessions," Quinn noted.
CORPORATE PROFILE
Solutia (http://www.Solutia.com) uses world-class skills in applied
chemistry to create value-added solutions for customers, whose products
improve the lives of consumers every day. Solutia is a world leader in
performance films for laminated safety glass and after-market applications;
process development and scale-up services for pharmaceutical fine chemicals;
specialties such as water treatment chemicals, heat transfer fluids and
aviation hydraulic fluid and an integrated family of nylon products
including high-performance polymers and fibers.
Solutia ...Solutions for a Better life.
-oOo-
Source: Solutia Inc.
St. Louis
Date 12/17/03