Solutia $100 million mandatory convertibles talked 7.25-7.75% yield, up 18-22%

By Ronda Fears

Nashville, Tenn., Jan. 28 - Solutia Inc.'s $100 million of three-year mandatory convertibles are talked to price at a yield of 7.25% to 7.75% and an 18% to 22% initial conversion premium. Salomon Smith Barney is book-runner of the deal with Bear Stearns & Co. as joint lead manager. Pricing is scheduled after the close Thursday.

The issue will be non-callable and is in the upper DECS structure with a five-year senior bond and a three-year forward stock purchase contract. Banc of America Securities and Morgan Stanley are co-managers.

St. Louis-based Solutia, a chemicals manufacturing firm, plans to use proceeds for the partial repayment of outstanding borrowings under its $800 million revolving credit facility, and said it plans to issue additional straight debt.

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