St. Louis, Missouri-based Solutia will receive US$54 million (369.1 million yuan) in cash and a 2 percent stake in a new company that will be formed to include the new business. SK Capital also will assume almost all of the nylon unit's liabilities, including employee and pension costs. Solutia will use proceeds from the sale to pay down debt.

The business being sold includes nylon resin -- sold under the Vydyne and Ascend trade names -- as well as fiber, feedstocks and compounds. The unit employs 2,000 and had sales of almost US$1.8 billion (12.5 billion yuan) in 2008, while posting a pretax loss of US$135 million (940 million yuan).

The deal, set to close by April 30, includes manufacturing plants in Alvin, Texas; Decatur, Alabama; Greenwood, South Carolina; Pensacola, Florida; and Foley, Alabama. Solutia has cut more than 400 jobs in Pensacola and Greenwood since late 2008.

Solutia's nylon business "is a noncore division of a major public company with good assets, good customers and good technology that was caught up in tough economic times," SK Capital co-founder and managing director Barry Siadat said in an April 1 phone interview.

Although demand is weak in the unit's major end markets -- including electrical/electronic, automotive and construction -- there will be opportunities when demand comes back, Siadat added.

"We don't mind buying a business that's not now in favor, as long as it has products that are important and needed by its customers," he said.

New York-based SK Capital was formed in 2007 to invest in the middle market specialty chemicals and health-care industries and made its first plastics purchase last year, buying sheet maker Aristech Acrylic LLC of Florence, Kentucky.

The firm plans to remain active in the mergers and acquisitions market during 2009, chief investment officer Clark Winter said via phone April 1.

"There's a lot of investment money sitting on the sidelines right now, even though there are a lot of properties available for one-third to 90 percent off," Winter said. "This is the time to buy identifiable assets."

Solutia placed its nylon unit up for sale in early 2008. Under SK Capital's ownership, the business will be led by Frederic Poses, formerly chief executive officer of American Standard and chief operating officer of AlliedSignal Inc. Other Solutia nylon managers are expected to remain in place, Siadat said.

In an April 1 news release, Solutia Chief Financial Officer James Sullivan said that the deal with SK Capital "provides fair value to Solutia stakeholders and advances the overall strategic positioning of the company."

Solutia spokesman Dan Jenkins said by phone April 1 that his firm's long-term strategy is centered on specialty chemicals and specialty materials.

"We realized that nylon is fundamentally different and more volatile and cyclical than the businesses we want to hold onto going forward," he said.

Solutia's remaining businesses include polyvinyl butral resins and interlayers, as well as hydraulic and heat transfer fluids. These businesses had annual sales of US$2.1 billion (14.6 billion yuan) and pretax profit of almost $400 million (2.78 billion yuan) in 2008.