Solutia divests nylon business; to focus on performance materials and specialty chemicals

02-Jun-09

Solutia Inc. (USA) has completed the sale of its nylon business to an affiliate of SK Capital Partners II, L.P. The company will now focus on its Performance Materials and Specialty Chemicals segments. SK Capital paid Solutia US$50 mln in cash (subject to a working capital adjustment) for the nylon assets. Solutia also received a 2% equity stake in the new company formed to hold substantially all of the assets of the nylon business. In addition Solutia will receive US$4 mln in deferred cash payments to be paid in annual US$1 mln installments beginning in 2011. SK Capital also has secured replacement of US$25 mln of letters of credit associated with the nylon business, which has resulted in increased availability for Solutia under its credit agreements. The affiliate of SK Capital will assume substantially all of the liabilities of the nylon business, including employee and pension liabilities relating to the active employees of the business and environmental liabilities. Solutia used the proceeds of the nylon sale to pay down debt under its asset-based revolving credit facility. Solutia's portfolio consists of three business segments - Saflex(R), Technical Specialties, and CPFilms(R) - each of which offer attractive margins and growth potential. These businesses are diversified geographically, with attractive long-term end-market characteristics.