Moody's may upgrade $1.2bn of Solutia debt on divestiture
05 December 2002 23:35 [Source: ICIS news]
HOUSTON (CNI)--Credit watchdog Moody's Investors Service said Thursday it was placing $1.2bn (Euro1.2bn) of Solutia's debt under review for possible upgrade following the company's agreement to sell its resins businesses to Belgium's UCB.
New York City-based Moody's noted that proceeds from the sale - $500m plus a $10m exclusivity fee - would be used to reduce Solutia's debt.
The transaction is subject to European regulatory approval.
Moody's said it was reviewing Solutia's debt because of the potential for a significant improvement in the company's financial profile.
It noted: "The proceeds from the transaction will be used to repay the current $300m term bank facility and all outstandings under the revolving credit facility, thereby reducing debt to roughly $825m - a 35% reduction in total debt."
In addition, Moody's said, its review will seek to balance the improvement in financial performance with Solutia's continuing environmental, pension and legal liabilities.
Moody's added: "Uncertainty over the size of potential settlements related to polychlorinated biphenyls contamination (PBC) in Anniston, Alabama and with the Pennsylvania Department of General Services will continue to adversely impact the company's credit profile."
Headquartered in St Louis, Missouri, Solutia is an integrated chemical and fibres company with primary business positions in nylon-based products, intermediates, acrylic fibres.
By: Mike Sheridan
+1 713 525 2653
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