Solutia sues financiers over delays in emerging from Chapter 11
ERJ staff report (DS)
St Louis, Missouri -- Solutia Inc. has filed a complaint in the US Bankruptcy Court for the Southern District of New York against the three banks -- Citigroup Global Markets Inc., Goldman Sachs Credit Partners L.P., and Deutsche Bank Securities Inc. --that had executed a firm commitment to fund a $2000 million exit financing package for Solutia, but to date have refused to meet this commitment.
Jeffry Quinn, chairman, president and CEO of Solutia Inc., said, "Solutia is ready to emerge from Chapter 11. We have successfully repositioned our company, we have confirmed a plan of reorganisation that brings significant value to our constituents, and our businesses are performing well. We now look to the banks to meet their commitment."
The complaint asserts that the banks should be stopped from invoking the clause they claim relieves them of their obligation due to their improper conduct and misrepresentations to the company, and further claims that the banks fraudulently induced Solutia to enter into the initial engagement by promising that the financing was firmly committed. Solutia and the banks have agreed that Solutia's claim to require immediate funding of the $2000 million package should be heard by the Court on an expedited basis, with the trial to conclude by the end of February prior to the expiration of the banks' commitment.
On October 25, 2007 , the banks executed a firm commitment to fund a $2000 million exit financing package for Solutia. These substantial, custom credit facilities and arrangements were specifically tailored to facilitate Solutia's prompt emergence from Chapter 11. On November 20, 2007 , the bankruptcy court approved the exit financing package. Nine days later, in reliance on the banks' firm lending commitment, the court found the plan of reorganization to be feasible and confirmed the plan. However, in late January - shortly before the anticipated closing of the exit facility and Solutia's long-awaited emergence from Chapter 11 - the banks notified Solutia that they were refusing to provide the funding, citing a so-called "market MAC" provision in their commitment letter and asserting that there has been a change in the markets since entering into the commitment.
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Press release from Solutia
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