Solutia Completes Refinancing of Senior Secured Term Loan

ST. LOUIS, March 3, 2011 /PRNewswire/ -- Solutia Inc. (NYSE: SOA), a market-leading performance materials and specialty chemicals company, today announced that it has completed the refinancing of its existing senior secured term loan and paid down an additional $18 million of debt in conjunction with the refinancing.  Over the past year, Solutia has repaid $150 million of its initial $850 million senior secured term loan. 

The refinancing includes a new $700 million senior secured term loan facility due August 1, 2017.  The loan was issued at par and has initial pricing of LIBOR plus 2.75 percent (with a leverage-based step-down to 2.50 percent) and a 0.75 percent LIBOR floor, for a current yield of 3.50 percent versus 4.50 percent under the initial term loan.  At today's interest rates, this pricing would reduce Solutia's annual interest expense by approximately $7 million.  As part of the refinancing, the Company also modified other terms of the agreement to improve strategic and financial flexibility, including moving to a single senior secured leverage covenant.

"This refinancing, coupled with the recent ratings upgrade from Standard & Poor's Ratings Services, is a reflection of the significant progress we have made in deleveraging the Company," said James M. Sullivan, Executive Vice President and Chief Financial Officer.  "As previously outlined, we plan to continue to strengthen the balance sheet and credit ratings over time." 

Related to this refinancing, the Company will incur approximately $6 million of charges in the first quarter, which is primarily the write-off of the original issue discount on the initial $850 million term loan.

Deutsche Bank Securities Inc. acted as sole lead arranger and bookrunner on the refinancing.

Source: http://feedproxy.google.com/~r/blogspot/NrBn/~3/KVWUbOuoAUw/solutia-completes-refinancing-of-senior.html

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