PCB Trial Hurts Solutia.
In afternoon trading on the New York Stock Exchange, Solutia shares were down $3.28, or 26.1 percent, to $9.27. The stock had fallen 10 percent on Wednesday.
St. Louis-based Solutia faces a trial set to begin next week in U.S. District Court in Birmingham, Ala. The lawsuit seeks damages on behalf of 3,600 people who lived in or visited frequently an area in Anniston, Ala., where a Monsanto Co. plant made polychlorinated biphenyls, or PCBs, for decades.
Monsanto, which is now a food and biotechnology company also based in St. Louis, sold its chemical business in 1997, forming Solutia.
``It's a case of 'When in doubt, get out,''' said Juli Niemann, an analyst for R.T. Jones Capital Equities. ``The market has been doing a lot of that lately. If we don't understand it, we move to the sidelines, and we'll figure it out later.''
Niemann said Solutia has fully disclosed its involvement in the lawsuit in filings with the Securities and Exchange Commission.
``They've got reserves for it,'' Niemann said. ``It's not like this (lawsuit) would be a company breaker.''
Monsanto produced PCBs in Anniston from 1927 to 1972. Used as an electrical insulator, PCBs were banned by the federal government in 1979 because of concern about toxicity.
Monsanto stopped making the chemical two years before the ban was enacted. The company is also no longer a party to the PCB litigation, as its liability to the product spun off with Solutia.
This week's stock price decline came after a storyTuesday in The Washington Post summarized the issues pending in the lawsuit.
a statement issued Wednesday, Solutia said it has spent more than $40
million in remedial activities in Anniston that include cleaning and
removing contaminated soil.