Solutia (SOA) to Sell Nylon Business to Affiliate of SK Capital
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Solutia Inc. (NYSE: SOA) today announced it has entered into a definitive agreement to sell its nylon business to an affiliate of SK Capital Partners II, L.P.
At the closing of the sale, Solutia will receive $50 million in cash and a 2% equity stake in a new company formed to hold substantially all of the assets of the nylon business. Solutia will also receive $4 million in deferred cash payments to be paid in annual $1 million installments beginning in 2011.
The agreement includes a minimum level of working capital to be delivered at closing, which is approximately $100 million lower than the actual reported balance at the end of 2008 and approximately $25 million lower than the expected balance at the end of Q1. 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 will use the nylon sale proceeds to pay down debt under its asset-based revolving credit facility.
In addition, SK Capital will secure replacement of $25 million of letters of credit associated with the nylon business, which will result in increased availability for Solutia under its credit agreements.
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