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): MARCH 2, 2005
SOLUTIA INC.
------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
--------
(STATE OF INCORPORATION)
001-13255 43-1781797
--------- ----------
(COMMISSION (IRS EMPLOYER
FILE NUMBER) IDENTIFICATION NO.)
575 MARYVILLE CENTRE DRIVE, P.O. BOX 66760, ST. LOUIS, MISSOURI 63166-6760
- --------------------------------------------------------------- ----------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(314) 674-1000
--------------
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions.
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
As previously reported, on December 17, 2003, Solutia Inc.
("Solutia") and its 14 U.S. subsidiaries filed voluntary petitions for
reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S.
Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court"). The cases were consolidated for the purpose of joint administration
and were assigned case number 03-17949 (PCB). Solutia's subsidiaries outside
the United States were not included in the Chapter 11 filing.
On March 2, 2005, the Bankruptcy Court approved a settlement
agreement (the "Settlement Agreement") made as of December 30, 2004, by and
among Solutia, Cytec Industries Inc. ("Cytec"), UCB S.A. ("UCB"), Solutia
Canada Inc. ("SOCAN"), Surface Specialties, Inc. ("SSI") and Surface
Specialties S.A. ("SSSA").
The Settlement Agreement (1) resolved issues arising out of various
contracts entered into by Solutia and its affiliates in connection with the
sale of Solutia's resins, additives and adhesives business to UCB pursuant
to a Stock and Asset Purchase Agreement dated December 2, 2002 (the "Solutia
SAPA"), and (2) required Solutia to assume certain of the foregoing
contracts as amended under the Settlement Agreement and required Solutia and
SOCAN to consent to the assignment to Cytec of such contracts in connection
with the sale of certain of UCB's assets, including the stock of SSI and
SSSA, to Cytec pursuant to a Stock and Asset Purchase Agreement between the
parties dated October 1, 2004 (the "UCB SAPA"). Solutia attached a copy of
the Solutia SAPA to the Form 8-K it filed with the Commission on February
18, 2003 (File No. 001-13255).
In connection with the closing of the transactions contemplated
under the Solutia SAPA, Solutia and its affiliates and UCB and its
affiliates entered into certain contracts for the provision of services to
UCB following closing (the "Contracts"). UCB subsequently underwent an
internal restructuring and assigned each of the Contracts to either SSI or
SSSA. Since the closing, certain disputes have arisen between the parties
under the Contracts and the Solutia SAPA, with each party asserting that the
other owed it certain sums.
In connection with UCB's sale of the stock of SSI and SSSA to Cytec
pursuant to the UCB SAPA, UCB requested that Solutia assume certain
Contracts and consent to UCB's assignment of the Contracts to Cytec. As an
inducement to Solutia to assume and consent to assignment of Contracts, the
parties agreed to amend certain of the assumed Contracts in a manner
favorable to Solutia. In addition, UCB paid certain sums to Solutia and
SOCAN and waived amounts allegedly owed by Solutia and SOCAN to UCB and its
affliaties under the Contracts and the Solutia SAPA.
The Settlement Agreement documents the agreements described in the
preceding paragraph. More specifically, pursuant to the Settlement
Agreement:
1. UCB waived tax indemnity and purchase price adjustment claims
against Solutia arising under the Solutia SAPA in the amount of
approximately $34.2 million. UCB is retaining its unliquidated
tax indemnity claim against Solutia in the amount of
approximately $18 million, and Solutia has reserved any and all
of its rights to object to, or otherwise dispute, such claim as
part of the claims resolution process in its bankruptcy case;
2. UCB paid Solutia $7.5 million in resolution of certain monetary
disputes with UCB arising under the Solutia SAPA;
3. UCB paid SOCAN approximately $3.9 million Canadian in resolution
of claims arising under the LaSalle Toll Agreement (as defined in
the Solutia SAPA);
4. UCB and its affiliates waived all claims against Solutia in the
amount of approximately $2.9 million for amounts allegedly due UCB
and its affiliates for accounts receivable collected by Solutia on
behalf of UCB and its affiliates;
5. UCB and its affiliates waived all claims against SOCAN in the
amount of approximately $2.7 million Canadian for amounts
allegedly due UCB for accounts receivable collected on behalf of
UCB and its affiliates;
6. Solutia obtained more favorable payment terms on each of the DME
Sales Contract (as defined in the Solutia SAPA) and the Adipic
Acid Supply Agreement (as defined in the Solutia SAPA);
7. The DME Sales Contract was modified so that the profit split for
resales is more favorable to Solutia; and
8. The Adipic Acid Supply Agreement's term was extended and Solutia
obtained an option to extend the term of the Ethyl-Acetate Sales
Contract (as defined in the Solutia SAPA), both of which favor
Solutia by providing a stable buyer of its products.
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.
-----------------------------
(Registrant)
/s/ Rosemary L. Klein
-----------------------------
Senior Vice President,
General Counsel and Secretary
DATE: March 8, 2005