Solutia Inc. to explore strategic alternatives for its nylon business

01-Jul-08

Solutia Inc. is exploring strategic alternatives for its nylon business - the world's second-largest producer of nylon 66 plastics. For this purpose, it has retained HSBC Securities (USA) Inc. to explore strategic alternatives, including a possible sale. Solutia's nylon business is one of only two world wide businesses that own the complete range of technology to produce nylon 66. The business is able to efficiently serve global markets from its integrated set of world-scale, flexible assets located in North America. During 2007, 28% of the business' sales came from Asia. The share of Asia demand is expected to rise after capacity expansion of 68,000 tons in 2008, driven by rapidly growing demand among Asian producers of automotive, electrical, and consumer goods. In 2007, the nylon business generated net sales of US$1892 mln (approx 51%) of Solutia's total revenue. In Q1-08, net sales were US$468 mln, increasing 10% yoy. Further growth and improvement in financial performance is predicted for the nylon business. But the company has decided to hive off the nylon business because of the growth of the high-margin specialty chemical and performance materials businesses that continue to do well. Solutia's other three business platforms Saflex®, CPFilms® and Technical Specialties, which generated net sales of US$1850 mln and adjusted EBITDAR of US$270 mln in 2007, generated US$108 mln in adjusted EBITDAR in the Q1-08, an increase of 23% over the same period in 2007.