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Solutia Seeks Chapter 11 Relief

Solutia Inc., St. Louis, a manufacturer of nylon products, specialty chemicals and performance films, and 14 of its US subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the US Bankruptcy Code. The filing excludes the company's affiliates outside the United States, and global operations will continue uninterrupted, supported by up to $500 million in new debtor-in-possession financing and the company's cash from operations.

The company cited the negative impact of  "legacy liabilities" on its ability to maintain financial stability and sustain its operations.  These liabilities include environmental remediation, litigation and settlement costs, and Monsanto retiree healthcare obligations assumed by Solutia upon its separation from the former Monsanto Co., now Pfizer subsidiary Pharmacia.

"We simply could not continue to sustain our operations burdened by Monsanto's legacy liabilities, which, combined with the weakened state of the chemical manufacturing sector, current economic conditions and the continuing high energy and crude oil costs with unprecedented volatility, [have] prevented us from realizing Solutia's true value," said John C. Hunter,  Solutia's chairman, president and CEO. "We believe that the Chapter 11 process will give us a forum to shed these burdensome liabilities and to compete on a more level playing field with others in our industry."

February 2004