Solutia obtains commitment for $825 million DIP due March 31, 2007

By Caroline Salls

Pittsburgh, Feb. 24 - Solutia Inc. has received a fully underwritten commitment for $825 million of debtor-in-possession financing, maturing March 31, 2007 that represents a $300 million increase and more than a nine-month extension over its current DIP financing, according to a company news release.

According to the release, the increased availability provides Solutia with additional liquidity for operations and the ability to fund mandatory pension payments that come due in 2006.

Solutia can repay the DIP financing at any time without prepayment penalties.

Citigroup is acting as lead arranger.

"While we ultimately may not need the extension to our DIP financing, it provides us with the flexibility we need to achieve the optimal resolution to our Chapter 11 case," president and chief executive officer Jeffry N. Quinn said in the release.

This amendment is subject to approval by the U.S. Bankruptcy Court for the Southern District of New York, which Solutia said it expects to receive in mid-March.

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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