Chemtura Corp (fka CHMT)

[Chemic76spirit]

FIDUCIARY COUNSELORS INC.
700 12th Street NW • Suite 700 • Washington, DC 20005 • phone [phone] • fax [phone]
October 14, 2009
To: Plan Participants and Beneficiaries in the Chemtura Corporation Employee
Savings Plan
Re: Chemtura Stock in Your Plan
As you know, Chemtura Corporation filed for bankruptcy protection under
Chapter 11 of the Bankruptcy Code on March 18, 2009. The Administrative
Committee of the Chemtura Corporation Employee Savings Plan (the “401(k)
Plan” or “Plan”) subsequently retained Fiduciary Counselors Inc. to (1) represent
the interests of the Plan’s Company Stock Fund (the “Fund”) in the bankruptcy
and (2) sell the Chemtura stock held by the 401(k) Plan if we determine that
continuing to hold Chemtura stock is no longer prudent and in the best interest of
Plan participants. The purpose of this letter is to explain our role, describe the
current restrictions in place with respect to the Fund, and update you on
developments in Chemtura’s bankruptcy related to the Fund.
Recently, the selling price of Chemtura stock has risen and Chemtura has
announced its intention to emerge from bankruptcy early in 2010. While these
appear to be positive indicators, there remains a significant level of risk associated
with investments in the Chemtura stock. We have asked for the appointment of an
Equity Committee to represent the interests of shareholders, including your 401(k)
Plan, in the bankruptcy. In opposing our request, Chemtura and the Unsecured
Creditors Committee have stated that they do not believe that there will be any
recovery for existing shareholders when Chemtura reorganizes. Thus there is a
significant risk that the existing Chemtura stock will be cancelled even if
Chemtura successfully reorganizes and the Chemtura stock held by the
401(k) Plan will be worthless.
Effective March 30, 2009, before our appointment, the Fund was closed to new
investments. Fiduciary Counselors does not have the authority to reopen the Fund
but we do have the authority to sell Chemtura stock held by the Plan if we
determine that continuing to hold that stock is no longer prudent.
Fiduciary Counselors Inc.
October 14, 2009
Page 2
On May 5, 2009, also before our appointment, the bankruptcy court approved an
order restricting sales of Chemtura stock by any shareholder that holds more than
5 million shares. Unfortunately, the result of the order was that you would have
been precluded from selling the Chemtura stock in your Plan account, since the
Plan holds over 11 million shares At our request, and utilizing the procedure set up
by the bankruptcy court at the time it issued its order, Chemtura waived those
restrictions for the Plan. Therefore, you remain free to sell the Chemtura stock in
your Plan account if you so choose.
Here are some things you should know in considering whether and when to sell
the Chemtura stock in your Plan account:
• Although a company may emerge from bankruptcy as a viable entity,
generally the creditors and the bondholders become the new owners
through newly-issued common stock and owners of the existing stock get
little or nothing. In most instances, the company’s plan of reorganization
will cancel the existing stock. If that happens in this case, your Chemtura
stock would become worthless. The SEC has an excellent primer for
investors on what happens to stock and other securities in a bankruptcy,
available online at http://sec.gov/investor/pubs/bankrupt.htm.
• The Company Stock Fund is structured as a “unitized” fund. That means, if
your Plan account is invested in the Company Stock Fund, you own “units”
of the Fund rather than actual shares of Chemtura stock. The Fund holds
shares of Chemtura stock and cash investments. Each unit of the Fund
represents both a proportionate interest in Chemtura stock and a
proportionate interest in the cash investments. The amount of cash
investments held by the Fund varies daily, based on a number of factors,
such as the price of Chemtura stock and the Fund’s liquidity needs. As a
result of cash held in the Company Stock Fund, the Fund does not provide a
one-for-one gain or loss in value when the value of Chemtura stock
increases or decreases. The cash component generally provides liquidity to
allow you to transfer out of the Company Stock Fund on a daily basis.
• If we determine that the Plan is unlikely to obtain any significant recovery
in the bankruptcy or is likely to receive less than the price at which the
stock is selling, we have the authority to protect the interest of participants
and beneficiaries by directing the Trustee to sell more shares of Chemtura
stock than would ordinarily be sold as a result of participant direction, or
even to liquidate the Company Stock Fund entirely. You should know that
if we sell Chemtura stock the cash investments held in the Company Stock
Fund will increase and that will cause the Fund to perform differently than
Fiduciary Counselors Inc.
October 14, 2009
Page 3
the stock itself. For example, when the stock price increases, the Company
Stock Fund does not appreciate at the same rate because of the cash
investments in the Company Stock Fund. Conversely, when the value of
Chemtura stock drops, the value of the Company Stock Fund does not drop
at the same rate because of the cash cushion.
• Chemtura stock was delisted from the NYSE and now trades on the overthe-
counter market, sometimes called the “pink sheets,” under the symbol
CEMJQ (the Q indicates that the company is in bankruptcy). The “pink
sheet” market is not a formal exchange and generally speaking there is less
trading opportunity and more speculative trading. This means that it may be
more difficult to dispose of the large block of Chemtura stock held by the
Plan without depressing the trading price.
• If you are currently eligible to take a distribution from the plan because you
are over age 59 ½ or have had a Severance from Service (as defined in the
Plan), you may elect to receive the vested balance of the Company Stock
Fund distributed in the form of Chemtura stock. This option will no longer
be available if the Company Stock Fund is liquidated.
Making Investment Changes or Requesting A Distribution
Fidelity continues to provide record keeping services for your Plan. Should you
wish to adjust your current asset allocation or take a distribution from the Plan,
you should follow the normal procedures by calling Fidelity at 1-800-421-3844.
You may also access and manage your account via personal computer by going to
the Fidelity NetBenefits® Web site at www.401k.com. Follow the instructions
online. Generally, if you request a transaction either by phone or online before 4
p.m. Eastern Time, it will be effective the next business day; if you request a
transaction by phone or online after 4 p.m. Eastern Time, it will be effective the
second business day after your request.
Throughout the Chemtura bankruptcy and reorganization process, Fiduciary
Counselors will continue to monitor the share price, the bankruptcy proceeding
and other developments to determine what actions can be taken to protect your
interests as Plan participants and beneficiaries. If and when we make decisions
that may have an effect on you, we will notify you as soon as practicable.
However, we may sell Chemtura stock as we deem prudent, increasing the cash in
the Company Stock Fund, without notifying you in advance.
Fiduciary Counselors Inc.
October 14, 2009
Page 4
If you have questions about actions that Fiduciary Counselors has taken, please
contact us by e-mail at [e-mail]. If you have
questions about your Plan and its investment options or distributions, contact
Fidelity at 1-800-421-3844 or visit your Plan on the internet at www.401k.com.
Sincerely,
Nell Hennessy
President & CEO
FIDUCIARY COUNSELORS INC.
Information was provided by Fiduciary Counselors. Fidelity Investments is not responsible for its content.
10-09