another article - relating to Solutia but indicative of the gen'l market as well.
Jeffry Quinn, Solutia’s chief executive officer, said in a statement: “The willingness of those banks to offer committed financing that was not subject to a successful syndication was a major factor in deciding to award them this business.”
The Wall Street Journal says the lawsuit, filed Wednesday, is believed to be one of the first of its kind and offers further evidence of how credit woes are making it harder and more expensive for companies to exit from bankruptcy.
The banks told Solutia last month that the tight credit market made them unable to find lenders to back the loan and qualified as a “materially adverse” condition that would allow the banks to terminate their agreement.
Solutia is demanding that the banks complete the deal or pay $2.25bn in damages, claiming fraud and breach of contract, reports the Journal. Solutia argues the banks knew the credit markets had been slowing for months when they agreed to the financing deal in late October. It also charges that on several occasions Citi directors and managing directors admitted the loan-syndication market was “horrible” and said they already knew Citi would not be able to syndicate the exit financing, the Journal adds.
The Solutia suit, and its underlying financing troubles, are “symptomatic of the general malaise in the credit markets,” James Millstein, co-head of restructuring at Lazard, told the Journal. “A number of other exit financings have run into trouble.”
