Solutia delays $100 million mandatory convertible deal, awaits Moody's rating

By Ronda Fears

Nashville, Tenn., Feb. 1 - Solutia Inc. delayed its $100 million offering of three-year mandatory convertibles pending a credit rating decision from Moody's Investor Services before pricing, which had been scheduled for after the close Thursday.

Solutia said action by Moody's is expected shortly, however.

The issue is expected to price to yield 7.25% to 7.75% yield with an 18% to 22% initial conversion premium. Salomon Smith Barney is bookrunner of the deal with Bear Stearns & Co. as joint lead manager.

The issue will be non-callable and will use the upper DECS structure with a five-year senior bond and a three-year forward stock purchase contract. Banc of America Securities and Morgan Stanley are co-managers.

St. Louis-based Solutia, a chemicals manufacturing firm, plans to use proceeds for the partial repayment of outstanding borrowings under its $800 million revolving credit facility, and said it plans to issue additional straight debt.

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