|
Comment on this article |
Email this Article
|
|
News :: Labor |
|
Solutia, Spinoff Of Monsanto, Files For Bankruptcy |
Current rating: 0 |
by reuters via sehvilla
Email: smann (nospam) riseup.net (verified) |
19 Dec 2003
|
|
Chemical maker Solutia Inc. (SOI.N: Quote, Profile, Research) filed for Chapter 11 bankruptcy protection yesterday, overwhelmed by huge liabilities related to environmental lawsuits and employee benefits it said were forced upon it by its former parent, Monsanto Co. |
Link: http://www.planetark.com/dailynewsstory.cfm/newsid/23175/story.htm
Story:
Solutia files bankruptcy in battle with Monsanto
--------------------------------------------------------------------------------
KANSAS CITY, Mo. - Chemical maker Solutia Inc. (SOI.N: Quote, Profile, Research) filed for Chapter 11 bankruptcy protection yesterday, overwhelmed by huge liabilities related to environmental lawsuits and employee benefits it said were forced upon it by its former parent, Monsanto Co. (MON.N: Quote, Profile, Research) .
Solutia also filed a lawsuit against the Pharmacia unit of Pfizer Inc. (PFE.N: Quote, Profile, Research) , the world's largest drug maker, seeking to assign some $475 million in employee benefit liabilities to Pharmacia, said Glenn Ruskin, a spokesman for St. Louis, Missouri-based Solutia.
The filings mark the latest twist in a long saga between the three once-intertwined organizations and bring uncertainty to former Monsanto retirees and parties in personal injury lawsuits and pollution cleanup operations around the United States.
Through various contractual arrangements, Monsanto, also based in St. Louis, and the former Pharmacia have been relying on Solutia to bear the financial responsibility for benefits covering 20,000 former Monsanto employees and their beneficiaries, environmental clean-up costs stemming from asbestos and PCB contaminations, and expenses for some 600 lawsuits involving the former Monsanto and Pharmacia.
In all, Solutia estimates the liabilities will cost it at least $100 million a year for the next five years and could eventually total about $755 million, Ruskin said.
Solutia took on those liabilities in 1997 when it was spun off from Monsanto as a pure chemical concern. Monsanto later merged into Pharmacia & Upjohn and then was itself spun off into an agrichemical and biotech company in 2002.
Solutia said Wednesday the liabilities were foisted upon it by Monsanto without negotiation and it had no choice but to assume the "onerous" obligations.
LEAVE IT TO THE COURTS
Now, struggling with high raw material and energy costs, Solutia has decided to reject the distribution agreement, leaving it to the bankruptcy courts to determine which of the three companies will have to meet the obligations.
Pfizer said Wednesday it had no obligation for the liabilities.
Meanwhile, Monsanto, which saw its shares fall more than 6 percent in early trading on the New York Stock Exchange, reacted angrily to the news and told investors it had not yet determined how much, if any, financial obligation it could be forced to bear because of the bankruptcy.
"We will not take on any obligations which are not ours," Monsanto CEO Hugh Grant said.
Monsanto shares settled down 83 cents at $26.65 Wednesday.
When it was spun off from Pharmacia in 2000, Monsanto agreed to assume certain liabilities if Solutia failed to cover the legacy liability obligations assigned it in 1997.
Solutia, which has $2.2 billion in sales and employs about 6,700, filed bankruptcy petitions in federal bankruptcy court in New York for itself and 14 U.S. units to reorganize under Chapter 11.
The filing prompted the New York Stock Exchange to suspend trading in Solutia shares.
Solutia said it has secured a commitment for up to $500 million in debtor-in-possession financing, and that its operations will continue as a manufacturer of window films, nylon plastics and fibers, including the brand name Wear-Dated carpet fibers.
It also said it reached an agreement with bondholders to restructure its euro notes, allowing its European operations to continue normal operations without filing for bankruptcy.
Solutia's long-running financial problems nearly led it to bankruptcy court in mid-August. But Monsanto stepped in to shoulder the bulk of a $675 million lawsuit settlement involving Alabama residents who alleged PCB contamination by Monsanto.
The two companies had continued to negotiate over Solutia's need for help with the liabilities, but those talks "were not going anywhere," Ruskin said.
Story by Carey Gillam
|
