Solutia seeks approval to amend debtor-in-possession financing

By Jeff Pines

Washington, July 2 - Solutia, Inc. wants approval to amend its debtor-in-possession financing. The proposed amendment would help the company with asset sales and restructuring, it said in a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

In addition, the amendment will help the St. Louis-based chemical company with real estate it either owns or leases. It will also permit certain de minimis charitable donations by Solutia's non-debtor subsidiaries or below-market sales of certain real estate parcels, the company said.

For example, if the amendment is approved, it will increase the amount from asset sales that Solutia will not have to repay to its lenders to $7.5 million from $2.5 million. It will also permit the company to keep the first $5 million from specified property sales and limit the prepayment obligation for proceeds of these sales to 50% of the next $10 million of sale proceeds, the company said.

The amendment will also enable Solutia to enter into certain sale-leaseback transactions.

Solutia said the amendment will increase the company's short-term liquidity, help it market new products, or establish new customer relationships and grant the company more flexibility in voluntary environmental remediation activities.

To get the amendment, Solutia would pay a 12.5 basis point fee, or $656,250 to the DIP lenders and a $250,000 documentation fee to the DIP agent.

A July 19 hearing is scheduled.

Solutia filed for bankruptcy on Dec. 17, 2003. Its Chapter 11 case number is 03-17949.

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