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): DECEMBER 21, 2005
(DECEMBER 15, 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 (the "Bankruptcy
Code") in the U.S. Bankruptcy Court for the Southern District of New York
(the "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 December 15, 2005 the Court approved Solutia's entry into a
Stock Purchase Agreement, dated as of November 23, 2005 (the "Purchase
Agreement"), by and between Solutia, a Delaware corporation, Vitro S.A. de
C.V., a corporation organized under the laws of Mexico ("Vitro"), and Vitro
Plan S.A. de C.V., a corporation organized under the laws of Mexico and
wholly-owned subsidiary of Vitro ("Vitro Plan"). Solutia announced its entry
into the Purchase Agreement in a press release and Form 8-K filed on
November 28, 2005. In connection with its grant of approval of the Purchase
Agreement, the Court also approved Solutia's entry into a Land Purchase
Agreement (the "Land Purchase Agreement"), between Solutia and Vidrio Plano,
S.A. de C.V., and supply agreements (the "Supply Agreements") between
Solutia and certain affiliates of Vitro. The Land Purchase Agreement and the
Supply Agreements will be dated as of the closing of the transactions
contemplated by the Purchase Agreement (the "Closing").
Pursuant to the Purchase Agreement, Solutia will acquire Vitro
Plan's 51% ownership interest (the "Purchased Interest") in Quimica M, S.A.
de C.V. ("Quimica"), Solutia's joint venture with Vitro Plan in the
production of polyvinyl butyral interlayer material ("PVB Sheet"). The
purchase will make Solutia the sole owner of Quimica. The purchase price for
the Purchased Interest and related real property is $20 million, payable by
Solutia to Vitro Plan in cash at the Closing.
Closing of the Purchase Agreement is subject to a number of
conditions, including the order entered by the Court on December 16, 2005
approving the Purchase Agreement and the matters related thereto (the
"Approval Order"), clearance from the Mexican Federal Competition Commission
and other customary closing conditions.
In addition to customary termination rights relating to material
adverse changes or impossibility of conditions precedent to the Closing, the
Purchase Agreement may be terminated by Solutia or Vitro Plan if the Closing
has not occurred within 120 days after November 23, 2005.
The Purchase Agreement includes an agreement by Vitro and its
subsidiaries not to engage in, or advise, consult with or assist any entity
engaged in, the production, manufacture, distribution or sale of PVB Sheet
for a period of five years after the Closing. Additionally, Solutia's
consent is required prior to any investment in Vitro Plan or any of its
subsidiaries by a competitor in the PVB Sheet industry. The Purchase
Agreement also includes a three-year restriction on the soliciting or hiring
by Vitro or any of its affiliates of any director, officer or employee of
Quimica and by Solutia of any director, officer or employee of Vitro or
Vitro Plan.
Vitro Plan has agreed to indemnify, defend and hold harmless
Solutia and its affiliates, including Quimica, from and against losses and
liabilities arising out of or resulting from breaches of the
representations, warranties and covenants contained in the Purchase
Agreement and certain liabilities of Quimica. Vitro Plan will only be
obligated to indemnify Solutia for 51% of losses and liabilities that relate
specifically to Quimica and the representations, warranties and covenants
made with respect thereto. The indemnification obligations are subject to
various limitations set forth in the Purchase Agreement.
The Land Purchase Agreement provides for the acquisition by
Solutia of certain land and water rights adjacent to the Quimica facility in
Puebla, Mexico (the "Quimica Facility") from Vidrio Plano, S.A de C.V.
As of the Closing, Solutia and Vitro, or their affiliates, will
enter into the Supply Agreements and certain existing PVB Sheet supply
agreements will be terminated by mutual agreement. The Supply Agreements
consist of PVB Sheet supply agreements between Solutia, or one of its
affiliates, and Vitro Automotriz, S.A. de C.V. (the "VAU Supply Agreement")
and between Solutia, or one of its affiliates, and Vitro Flex, S.A. de C.V.
(the "Vitro Flex Supply Agreement"). The term of the VAU Supply Agreement is
five years, with automatic annual renewals thereafter until terminated. The
term of the Vitro Flex Supply Agreement is one year, renewable annually
through December 31, 2010. Both Supply Agreements cover 100% of the
requirements for Saflex(R) PVB Sheet of each of Vitro Automotriz and Vitro
Flex, respectively.
The description of the Purchase Agreement contained herein sets
forth a brief summary of certain terms of the Purchase Agreement that may be
material to Solutia. However, the description does not purport to be
complete and is qualified in its entirety by reference to the specific terms
of the Purchase Agreement, a copy of which is attached hereto as Exhibit
10.1.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
Exhibit Number Description
- -------------- -----------
10.1 Stock Purchase Agreement, dated as November 23,
2005 by and between Solutia Inc., Vitro S.A. de
C.V., and Vitro Plan S.A. de C.V.
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: DECEMBER 21, 2005