Solutia asks court to approve registration rights agreement

By Jennifer Lanning Drey

Portland, Ore., Nov. 26 - Solutia, Inc. requested court approval of a registration rights agreement that is the result of negotiations between the company, its creditors' committee and backstop investors, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of New York.

According to the motion, a covenant in the previously approved backstop commitment agreement requires the registration of new common stock for resale by the backstop investors pursuant to a registration rights agreement. The covenant was essential to the backstop investors' decision to fully backstop the rights offering, Solutia said in the filing.

As previously reported, Solutia has obtained court approval for a backstop commitment for its $250 million rights offering from a group of backstop investors that includes Highland Crusader Holding Corp., Longacre Fund Management, LLC, Merrill Lynch, Pierce, Fenner & Smith Inc., GMAM Investment Funds Trust II, ReCap International (Master) Ltd., Institutional Benchmarks Series (Master Feeder) Ltd., Southpaw Asset Management LP and UBS Securities LLC.

In exchange for their agreement to backstop the rights offering, the backstop investors will receive an up to $6.25 million backstop fee; reimbursement of up to $1.3 million in expenses and the right to purchase 2.81 million shares of new common stock being offered in the rights offering.

A hearing has been scheduled for Nov. 29.

Solutia, a St. Louis-based manufacturer and provider of performance films, specialty chemicals and an integrated family of nylon products, filed for bankruptcy on Dec. 17, 2003. Its Chapter 11 case number is 03-17949.

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