Solutia asks for approval of deal with Monsanto regarding Alvin plant

By Reshmi Basu

New York, Nov. 15 - Solutia, Inc. asked the court to approve a settlement deal with former parent Monsanto Co., which would reset the terms of an agreement related to the future use of a chemical plant in Alvin, Texas, according to a Thursday filling with the U.S. Bankruptcy Court for the Southern District of New York.

Under a master operating agreement, Monsanto leases a facility from Solutia, which is used to make disodium iminodiacetic acid. Monsanto also has an agreement in which it purchases certain raw materials for use at the facility. The agreements expire in 2017.

According to the court papers, both parties agreed to negotiate the future terms of the deal but were at an impasse on many issues, including the termination date of the agreements or the scope of Monsanto's obligations under the various agreements.

The proposed settlement sets an automatic expiration date of Dec.31, 2012, establishes a minimum threshold of the quantity of raw materials that Monsanto will buy, and gives Monsanto the right to end the agreements during the last five years of the contract as long as the company gives a 12-month notice.

Furthermore, Monsanto will make a $30 million to $95 million payment to Solutia, depending on the effective date of the termination.

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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