X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
After 18 months in bankruptcy and nearly eight years after its spinoff, Solutia Inc. has reached a truce with former parent Monsanto Co. and its unsecured creditors. Under an agreement announced Tuesday, Solutia would offer $250 million in new stock to unsecured creditors in a rights offering backstopped by Monsanto. The St. Louis-based agricultural biotechnology company and unsecured creditors would split the rest of the stock of a reorganized Solutia. If unsecured creditors take up none of the offering, Monsanto would end up with 52.5 percent of Solutia. If, on the other hand, the unsecureds buy all the shares, Monsanto would hold a 29.8 percent stake. Secured creditors would be paid in full from exit financing, Solutia spokesman Dan Jenkins said. He could not provide any details on the funding. However, equity holders would likely be wiped out, Solutia said. Liabilities and litigation costs the specialty chemicals company inherited from Monsanto led to Solutia’s Chapter 11 filing on Dec. 17, 2003. And the two companies have been fighting over who should bear the liabilities ever since. Tuesday’s agreement is the result of sustained and constant negotiations, said the counsel to unsecured creditors, Daniel H. Golden of Akin Gump Strauss Hauer & Feld. The agreement resolves three key disputed areas, Jenkins said. According to Solutia, most of the proceeds from the rights offering — $150 million — would be used to fund medical, disability and life insurance benefits of Monsanto employees who retired before the spinoff that would have shifted them to Solutia. Another $50 million would go toward the environmental cleanup, or remediation, of two sites in Anniston, Ala., and Sauget, Ill. Monsanto would pay for the next $50 million in remediation costs. Any additional costs would be paid by Solutia up to an unspecified level, after which the two companies would split the cleanup bill. Monsanto would also pay for remediation at sites never owned or operated by Solutia. Monsanto has agreed to contribute up to $107 million, less expenses, to help pay unsecured creditors. The funds would come on top of the shares and the rights offering shares that creditors are scheduled to receive. The last $50 million in proceeds from the rights offering would be reserved for paying off liabilities in any of the three areas. The implementation of the settlement depends on the bankruptcy court. Golden said the creditors’ committee will work with Solutia in drawing up a reorganization plan. He hopes they can file a plan and disclosure statement with the U.S. Bankruptcy Court for the Southern District of New York in Manhattan before the end of July. Jenkins added that Solutia could emerge by year’s end. John C. Longmire of Willkie Farr & Gallagher, counsel to Monsanto, said the company was pleased with the agreement, even though hurdles remain before it becomes official. Monsanto spun off its chemicals business in September 1997 to focus on agriculture, leaving Solutia with known and unknown liabilities that were valued at $2 billion to $4 billion after it filed for bankruptcy. Court documents put the annual litigation and legacy costs at $100 million. Monsanto itself was spun out of Pharmacia Corp. in August 2002. Pharmacia had bought Monsanto in March 2000. Judge Prudence Carter Beatty is overseeing Solutia’s case in the Manhattan court. Richard M. Cieri and Jonathan S. Henes are debtor counsel at Kirkland & Ellis. Henes did not return a call for comment. Todd R. Snyder of Rothschild Inc. is providing Solutia with financial advice. Thomas L. Zambelli of Kroll Zolfo Cooper is the company’s restructuring adviser. Golden and Ira S. Dizengoff of Akin Gump represent unsecured creditors. Myron Trepper, Longmire and Shelley C. Chapman are Monsanto’s counsel at Willkie Farr. Copyright �2005 TDD, LLC. All rights reserved.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.