Exhibit 99.3
[SOLUTIA logo] News
SOLUTIA INC.
575 Maryville Centre Drive
St. Louis, Missouri 63141
P.O. Box 66760
St. Louis, Missouri 63166-6760
FOR IMMEDIATE RELEASE
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MEDIA: Paul J. Berra III (314) 674-5325
INVESTORS: Tim Spihlman (314) 674-5206
SOLUTIA INC. FILES AMENDED PLAN OF REORGANIZATION
AND DISCLOSURE STATEMENT
o MAINTAINS KEY BENEFITS OF ORIGINAL PLAN OF REORGANIZATION FOR SOLUTIA,
INCLUDING RELIEF FROM LEGACY LIABILITIES
o PROVIDES FOR SIGNIFICANTLY INCREASED CREDITOR RECOVERIES
o POSITIONS SOLUTIA TO EMERGE FROM CHAPTER 11
o SUPPORTED BY OFFICIAL COMMITTEE OF UNSECURED CREDITORS, MONSANTO
COMPANY, PHARMACIA CORPORATION, OFFICIAL COMMITTEE OF RETIREES, AND
AD HOC COMMITTEE OF TRADE CREDITORS
ST. LOUIS - MAY 16, 2007 -- Solutia Inc. (OTCBB: SOLUQ), a leading
manufacturer and provider of high-performance specialty materials and
chemicals, today announced it has filed an Amended Plan of Reorganization (the
"plan") and Disclosure Statement with the Bankruptcy Court for the Southern
District of New York. The filing of the plan was supported by the Official
Committee of Unsecured Creditors (the "Creditors Committee"), Monsanto Company
(NYSE: MON) ("Monsanto"), Pharmacia Corporation ("Pharmacia"), the Official
Committee of Retirees (the "Retirees Committee"), and the Ad Hoc Committee of
Trade Creditors.
"We are pleased to have filed a plan that positions Solutia to emerge
from chapter 11 with an improved cost structure, strengthened balance sheet,
and greatly reduced risk profile,"
said Jeffry N. Quinn, chairman, president and chief executive officer of
Solutia Inc. "Importantly, we will do so while providing significant
recoveries for our creditors, ensuring all environmental remediation
commitments will be met, securing and providing significant funding for
retiree welfare benefits, and preserving our pension plan."
AMENDED PLAN MAINTAINS KEY BENEFITS OF ORIGINAL PLAN OF REORGANIZATION
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The plan maintains the key benefits provided for Solutia under the
Original Plan of Reorganization (the "original plan") filed by the company in
February 2006, but provides greater recoveries for creditors due to an
increase in the estimated equity value of the reorganized company. In
addition, there has been some reallocation of the equity ownership of the
reorganized company.
RELIEF FROM LEGACY LIABILITIES
The plan provides significant relief from the legacy liabilities
Solutia was required to assume when spun off from Pharmacia (formerly known as
Monsanto Company) in 1997. These legacy liabilities include: 1.) retiree
medical, retiree life insurance, and disability benefits for those individuals
whom retired or became disabled prior to the Solutia spinoff; 2.)
environmental remediation costs related to activities of the chemicals
business of Pharmacia that occurred prior to the Solutia spinoff; and 3.)
toxic tort litigation costs relating to chemical exposure associated with the
activities of Pharmacia that occurred prior to the Solutia spinoff.
RELIEF FROM TORT LITIGATION AND ENVIRONMENTAL REMEDIATION LIABILITIES
Under the plan, as between it and Solutia, Monsanto will assume
financial responsibilities in the areas of tort litigation and environmental
remediation.
o Monsanto will be financially responsible for all current
and future tort litigation
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costs arising from Pharmacia's chemical business prior to
the Solutia spinoff. This includes litigation arising from
exposure to PCBs and other chemicals.
o Monsanto will accept financial responsibility for
environmental remediation and clean-up obligations at all
sites for which Solutia was required to assume
responsibility at the spinoff but which were never owned
or operated by Solutia. Solutia will remain responsible
for the environmental liabilities at sites that it
presently owns or operates.
o Solutia and Monsanto will share financial responsibility
with respect to two sites. Under this cost-sharing
mechanism, the first $50 million of post-emergence
remediation and cleanup costs will be funded by the
proceeds of the rights offering described below. As
required, Monsanto has already expended more than $50
million during the course of Solutia's chapter 11 case
with respect to these sites. As a result, Monsanto will be
entitled to an administrative claim of at least $14.2
million. Upon emergence, Solutia would be responsible for
the funding of these sites up to an agreed upon amount.
Thereafter, if needed, Monsanto and Solutia would share
responsibility equally. Solutia would be able to defer
paying off-site remediation costs relating to these sites
that exceed $30 million in any calendar year and any
deferred amounts would be paid by Monsanto, subject to
repayment by Solutia at a later date.
$250 MILLION OF NEW INVESTMENT
The plan provides for $250 million of new investment in reorganized
Solutia. This investment will be in the form of a rights offering to certain
unsecured creditors, whom will be given the opportunity to purchase 27.9% of
the common stock in the reorganized company. Of this $250 million, $175
million will be set aside in a Voluntary Employees' Beneficiary Association
(VEBA) Retiree Trust to fund the retiree welfare benefits for those pre-spin
retirees whom receive these benefits from Solutia. Additionally, $75 million
will be used by reorganized Solutia to pay for other legacy liabilities being
retained by the company.
COMPREHENSIVE RETIREE SETTLEMENT
The plan provides for the same comprehensive retiree settlement that
was negotiated with
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the Retirees Committee and included in the original plan. Although the
settlement includes benefit modifications, the plan provides significant
current funding of these benefit obligations, which greatly improves Solutia's
ability to meet these benefit obligations going forward.
In consideration for the contemplated modification in benefits, the
retirees will receive an unsecured claim of $35 million in Solutia's chapter
11 case. The common stock received in reorganized Solutia on account of this
claim will be deposited into the VEBA Retiree Trust, along with the $175
million from the rights offering described above. The VEBA Retiree Trust will
be a bankruptcy-remote entity and will be managed by an independent trustee.
ADDITIONAL MATTERS
The plan includes an assumption and extension of commercial and
operating agreements between Solutia and Monsanto. The plan also seeks a
discharge for Solutia from most pre-petition claims.
VALUATION AND ANTICIPATED CREDITOR RECOVERIES
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"As a result of the successful execution of our reorganization
strategy, we have substantially increased the value of the company since the
filing of the original plan," said Quinn. Under the plan, Solutia estimates
that the enterprise value of reorganized Solutia will be $2.85 billion, with
corresponding implied reorganization equity value of approximately $1.2
billion. Quinn added, "The men and women of Solutia believe in the future of
this company, and it is because of their hard work and perseverance that we
have been able to revitalize the company and position it for long term
success."
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ANTICIPATED CREDITOR RECOVERIES
"The plan provides for substantially enhanced creditor recoveries
compared to the original plan filed in February 2006. Under the original plan,
unsecured creditors would have received recoveries of approximately 52%,
compared with estimated recoveries of nearly 85% under the current plan,"
added Quinn. "And, with the bankruptcy court's recent ruling regarding the
unsecured status of certain of our noteholders, we are able to move forward
without the significant creditor classification issues that bogged down moving
the original plan toward confirmation."
Under the plan, Solutia's senior secured notes will be paid in full
in cash from proceeds from an exit financing package to be arranged by the
company. The plan also provides that the following creditors and equity
interest holders will receive the following distributions. (These
distributions assume full subscription to the rights offering by those
creditors who are entitled to participate):
o HOLDERS OF ALLOWED GENERAL UNSECURED CLAIMS will receive their pro
rata share of 34.1% of the new common stock. Based on the mid-point
of Solutia's estimates with regard to the aggregate amount of the
allowed general unsecured claims, this will result in a recovery of
84.8 cents on the dollar.
o HOLDERS OF ALLOWED NOTEHOLDER CLAIMS will receive their pro rata
share of 44.1% of the new common stock. This will result in a
recovery of 84.8 cents on the dollar, the same as all other General
Unsecured Creditors.
o MONSANTO will receive 20% of the new common stock. In addition,
Monsanto will have an allowed administrative claim for all amounts
spent by Monsanto in excess of $50 million in connection with
environmental cleanup and remediation at the sites for which it
shared responsibility with Solutia during the chapter 11 cases.
o In accordance with the terms of the retiree settlement agreement, the
RETIREES as a class will receive 1.8% of the new common stock. This
stock will be deposited into a VEBA Retiree Trust that will be used
to pay retiree welfare benefits. This is in addition to the $175
million from the rights offering that will be deposited into the VEBA
Retiree Trust as stated above.
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o HOLDERS OF EQUITY INTERESTS in Solutia will receive no distributions
on account of such equity interests.
As set forth in the plan, Solutia currently estimates that the size
of the unsecured noteholder claims pool will be $455.4 million; and that the
general unsecured claims pool will range from $327 - $377 million with a
mid-point of $352 million.
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS OF REORGANIZED SOLUTIA
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Under the plan, reorganized Solutia will be an independent, publicly
traded company listed on a national exchange. Reorganized Solutia will have
nine members on its Board of Directors. The nine members will consist of
Jeffry N. Quinn, Solutia's current chairman, president and chief executive
officer; one continuing director of Solutia; one director designated by
Monsanto; and six directors designated by the Creditors Committee. The six
directors will be designated by the Creditors' Committee in consultation with
the company and Monsanto. Solutia will retain a nationally recognized
executive search firm to assist in the selection of members of the initial
Board of Directors.
NEXT STEPS IN REORGANIZATION PROCESS
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The next major step in the reorganization process will be to conduct
a hearing to consider the legal adequacy of the Amended Disclosure Statement.
Solutia will request a bankruptcy court hearing regarding this matter in early
July. If the court determines that the Amended Disclosure Statement provides
sufficient information for claim holders and other interested parties to vote
on the plan, then the Amended Disclosure Statement and plan would be sent to
claim holders for voting purposes. Following the voting process, Solutia will
ask the bankruptcy court to hold a hearing to consider approval or
"confirmation" of the plan. If the court confirms the plan, Solutia would
emerge from chapter 11 shortly thereafter.
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"With our current momentum, I believe Solutia will be able to emerge
from chapter 11 as a strong and viable company in the third quarter," said
Quinn.
Solutia's Amended Plan of Reorganization and Disclosure Statement are
available at http://www.solutia.com/reorganization.
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FORWARD LOOKING STATEMENTS
This press release may contain forward-looking statements, which can be
identified by the use of words such as "believes," "expects," "may," "will,"
"intends," "plans," "estimates" or "anticipates," or other comparable
terminology, or by discussions of strategy, plans or intentions. These
statements are based on management's current expectations and assumptions
about the industries in which Solutia operates. Forward-looking statements are
not guarantees of future performance and are subject to significant risks and
uncertainties that may cause actual results or achievements to be materially
different from the future results or achievements expressed or implied by the
forward-looking statements. These risks and uncertainties include, but are not
limited to, those described in Solutia's most recent Annual Report on Form
10-K, under "Cautionary Statement About Forward Looking Statements," Solutia's
quarterly reports on Form 10-Q, and in filings with the U.S. Bankruptcy Court
in connection with the Chapter 11 case of Solutia Inc. and 14 of its U.S.
subsidiaries. These reports can be accessed through the "Investors" section of
Solutia's website at www.solutia.com. The bankruptcy court filings can be
accessed by visiting www.trumbullgroup.com. Solutia disclaims any intent or
obligation to update or revise any forward-looking statements in response to
new information, unforeseen events, changed circumstances or any other
occurrence.
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;
chemicals for the rubber industry; 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.
SOURCE: SOLUTIA INC.
ST. LOUIS
5/16/07
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