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Solutia Declares Force Majeure

Raw material and utility shortage slow Solutia's nylon business

by Marc S. Reisch
October 11, 2005

Raw material and energy shortages are having serious effects far from where Hurricane Rita came ashore on the Texas border with Louisiana late last month. The storm's latest victim is Solutia.

Solutia has declared force majeure for nylon products produced at its Pensacola, Fla., and Greenwood, S.C., operations. Those products include adipic acid, nylon fiber used to make things such as tire reinforcement cord and airbags, and polymers for automotive and packaging applications.

Solutia says some of its suppliers that took the full brunt of the storm's force had already declared force majeure. Those actions, combined with widespread raw material and utility shortages caused by the storm, have forced Solutia to allocate available supply of nylon products for the time being.

Though Solutia is not estimating the impact these actions will have on its earnings, the company says it will retain a portion of the $97 million it expects to receive from the pending sale of its share in the Astaris phosphates joint venture to Israel Chemicals. While the firm originally planned to devote the full amount to paying off debt, it says it now will need at least some of that money to maintain liquidity levels.

Solutia, which declared bankruptcy in 2003 under the weight of environmental and retiree obligations, says it expects bankruptcy court approval for the Astaris sale in mid-November.

Others miles away from the storm have also felt Rita's wrath. Last week, BASF declared force majeure for styrenic products produced in Altamira, Mexico. Also, Kraton Polymers says ongoing problems in the Gulf mean it will have limited ability to supply isoprene-based products from its Belpre, Ohio, plant.




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