UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JANUARY 30, 2004
SOLUTIA INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OF INCORPORATION)
001-13255 43-1781797
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(COMMISSION (IRS EMPLOYER
FILE NUMBER) IDENTIFICATION NO.)
575 MARYVILLE CENTRE DRIVE, P.O. BOX 66760, ST. LOUIS, MISSOURI 63166-6760
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(314) 674-1000
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REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
ITEM 5. OTHER EVENTS.
On February 3, 2004, Solutia issued a press release announcing that
its subsidiary, Solutia Europe SA/NV had successfully restructured its 6.25%
Euro Notes, due in 2005. The Terms and Conditions of the Euro Notes were
amended and restated in connection with the restructuring, as described in
the press release. Subsequently, Solutia Europe entered into a Fiscal Agency
Agreement, a Collateral Agency Agreement and various collateral documents
pursuant to which, among other things, KBC Bank NV was appointed as
Collateral Agent for the holders of the Euro Notes and Solutia Europe
granted to the Collateral Agent security interests in substantially all of
its assets. In addition, three Solutia Europe subsidiaries, Solutia Services
International SCA/Comm.VA, or SSI, Amcis AG and CarboGen AG, which are
referred to collectively as the Subsidiary Guarantors, entered into the
Collateral Agency Agreement, guarantees of Solutia Europe's obligations in
respect of the Euro Notes, and various collateral documents pursuant to
which the Subsidiary Guarantors granted to the Collateral Agent security
interests in certain of their respective assets.
Additionally, to the extent that certain minority shareholders of
Solutia Europe's subsidiary, CP Films Vertriebs GmbH, or CPFilms Germany,
approve CPFilms Germany's participation in the restructuring, CP Films
Germany will enter into the Collateral Agency Agreement, a guarantee of
Solutia Europe's obligations in respect of the Euro Notes and certain
collateral documents pursuant to which CP Films Germany will grant to the
Collateral Agent security interests in certain of its assets, subject to
certain limitations and restrictions. Solutia Europe anticipates that CP
Films Germany will enter into such documentation later this year, and
Solutia anticipates filing that documentation in another Report on Form 8-K
after it is executed.
Solutia Europe also entered into an Agreement of Understanding and
Restructuring with members of the Ad-Hoc Committee of the holders of the
Euro Notes that sets forth, among other items, the process for implementing
the guarantees, the security and the pledges associated with the
restructuring.
A copy of the press release, the Terms and Conditions of the Euro
Notes, the Fiscal Agency Agreement, the Collateral Agency Agreement, the
guarantees of the Subsidiary Guarantors and substantially all of the
collateral documents entered into by Solutia Europe and the Subsidiary
Guarantors are filed as exhibits to this Report on Form 8-K and are
incorporated herein by reference.
Pursuant to the Agreement of Understanding and Restructuring,
Solutia Europe agreed to file a Report on Form 8-K relating to the
restructuring, in form and substance acceptable to the Ad-Hoc Committee of
the holders of Euro Notes. This Report on Form 8-K is being filed in order
to comply with that obligation.
The press release highlights the material amendments to the Terms
and Conditions of the Euro Notes, including the addition of covenants
affecting the ability of Solutia Europe and its subsidiaries to transfer
cash out of those entities until the Euro Notes are paid. One of those
covenants prohibits Solutia Europe from paying any principal or interest on
its Convertible Subordinated Bonds. These Convertible Subordinated Bonds are
presently outstanding in the principal amount of approximately BEF
4,950,000,000, and are held by two subsidiaries of Solutia Inc., Solutia
Europe's ultimate parent company. The Convertible Subordinated Bonds provide
for cash payment of interest on January 26 of each year, generally at the
rate of 5 percent per annum, are subordinated to the Euro Notes and are
convertible into equity of Solutia Europe. Solutia Europe did not make the
interest payment due on the Convertible Subordinated Bonds due on or about
January 26, 2004. In addition, so long as the Euro Notes are outstanding,
Solutia Europe does not intend to pay the interest that will come due on any
of the Convertible Subordinated Bonds that are not converted into equity.
Such a failure to pay interest will result in the Convertible Subordinated
Bonds being in default and will entitle the holders (presently Monchem
International, Inc. and Solutia Investments, LLC) to take certain actions.
However, if the holders of the Convertible Subordinated Bonds take such
action, or if Solutia Europe makes payment on these bonds prior to repayment
of the Euro Notes, this will cause an event of default under the Euro Notes
and will entitle the holders of the Euro Notes to enforce their rights under
the subordination provisions of the Convertible Subordinated Bonds.
The Mortgage Agreement, the Mortgage Mandate Agreement and the
Floating Charge Agreement, which are filed as exhibits to this Report on
Form 8-K, are the English translations of such documents. The definitive
versions of such documents, which are substantively the same as the English
translations thereof, are in Dutch and are available from Solutia Europe
upon request.
The description set forth herein does not purport to be complete
and is subject to the detailed provisions of the documents attached as
exhibits to this Report on Form 8-K attached hereto, which are incorporated
by referenced in their entirety, and the other documentation entered into by
Solutia Europe and the Subsidiary Guarantors, copies of which Solutia Europe
will furnish to a noteholder of the Euro Notes upon request. In addition to
the specific restrictions set forth in the respective documents, the rights
and obligations under such documents are further restricted pursuant to the
applicable laws and regulations governing Solutia Europe and its
subsidiaries and such documents. Existing and prospective holders of the
Euro Notes should review all of the relevant documentation and consult with
their European and U.S. legal counsel and advisors. Solutia Europe has also
filed a Supplement to the Offering Circular dated February 11, 2000 relating
to the Euro Notes with the Luxembourg Stock Exchange. Copies of the
Supplement are available at the offices of the Luxembourg Paying Agent for
the Euro Notes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits listed below are filed as part of this report.
Exhibit Number Description
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99.1 Press Release
99.2 Terms and Conditions of Euro Notes
99.3 Fiscal Agency Agreement dated February 11, 2004
among Solutia Europe SA/NV, Kredietbank SA
Luxembourgeoise as fiscal agent and paying
agent, and KBC Bank NV as principal paying agent
99.4 The Collateral Agency Agreement dated February
11, 2004 among KBC Bank NV, as Collateral Agent,
Solutia Europe SA/NV and the Subsidiary
Guarantors
99.5 Form of Global Note
99.6 Subsidiary Guaranty dated February 11, 2004 of
Amicis AG
99.7 Subsidiary Guaranty dated February 11, 2004 of
CarboGen AG
99.8 Subsidiary Guaranty dated February 17, 2004 of
Solutia Services International SCA/Comm.VA
99.9 Commercial Receivable Pledge Agreement dated
February 11, 2004 between Solutia Europe SA/NV
and KBC Bank NV
99.10 Mortgage Agreement dated February 11, 2004
between Solutia Europe SA/NV and KBC Bank NV
99.11 Mortgage Mandate Agreement dated February 11,
2004 between Solutia Europe SA/NV and KBC Bank
NV
99.12 Floating Charge Agreement dated February 11,
2004 between Solutia Europe SA/NV and KBC Bank
NV
99.13 Share Pledge Agreement dated February 11, 2004
between Solutia Europe SA/NV and KBC Bank NV
(relating to Amcis AG)
99.14 Share Pledge Agreement dated February 11, 2004
between Solutia Europe SA/NV and KBC Bank NV
(relating to CarboGen AG)
99.15 Commercial Share Pledge Agreement dated February
17, 2004 between Solutia Europe SA/NV and KBC
Bank NV (relating to Services International
SCA/Comm.VA)
99.16 Trademark Pledge Agreement between Amcis AG and
KBC Bank NV
99.17 Trademark Pledge Agreement between CarboGen AG
and KBC Bank NV
99.18 Assignment Agreement between Amcis AG and KBC
Bank NV
99.19 Assignment Agreement between CarboGen AG and KBC
Bank NV
99.20 Commercial Receivable Pledge Agreement dated
February 11, 2004 between Solutia Services
International SCA/Comm.VA and KBC Bank NV
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
SOLUTIA INC.
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(Registrant)
/s/ Rosemary L. Klein
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Assistant Secretary
DATE: FEBRUARY 23, 2004