Solutia Inc,
the nylon
and plastics maker seeking to force Citigroup Inc and other banks to fund its US$2-billion bankruptcy exit loan, knew the loan might be nullified by a change in the markets, a witness for the banks testified.
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PU5VDavid Jaffe, a director in the asset-based finance group at Citigroup, testified in the United States Bankruptcy Court in
New York on Saturday that Solutia officials never asked for specific written criteria in the so-called market MAC clause. Such clauses cite "material adverse changes" as a reason to cancel a contract.
中国英语博客基地(English Blogs-英语麦当劳博客空间)*R loRe(j中国英语博客基地(English Blogs-英语麦当劳博客空间)nW3C'c dV:~"I remember telling them, it's like pornography;
you know it when you see it," Jaffe told US Bankruptcy Judge Prudence Carter Beatty. Asked if he remembered the response of Solutia Chief Financial Officer James Sullivan, Jaffe said Sullivan laughed.
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h1r-U{6{The testimony was presented on the third
day of a four-day trial in which St Louis-based Solutia is suing New York-based Citigroup, Goldman Sachs Group Inc and Deutsche Bank AG to force them to fund the loan or pay US$2.25 billion in damages.
N8ZJvW0 u{%D2s'g0\ M L#Ji0Solutia filed for bankruptcy in 2003, according to Bloomberg News. It has said its reorganization will be thrown into doubt if the banks don't fund the loan because it will lose a commitment on February 28 from investors who agreed to back a US$250-million rights offering. It also said its settlement
with former parent Monsanto Co is in jeopardy.
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o$FF1k"oAHsThe banks said deterioration in the credit markets from October 25, when the loan was signed, to late January, when they pulled out of the deal, triggered the market MAC clause.
中国英语博客基地(English Blogs-英语麦当劳博客空间)n5{7{)S,]n;T @'y中国英语博客基地(English Blogs-英语麦当劳博客空间)3Bl _${0G1^Beatty previously said she will consider how the banks portrayed the loan to Solutia, as well as how different clauses in the loan agreement interact.
9n0_"\6dx4`08X ? nsD5H'b0Last year, Citigroup sought a cash infusion from the ruling family of Abu Dhabi because losses on US subprime-mortgage investments left the bank short of its own capital targets.
