SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): March 16, 2000
ASHLAND INC.
(Exact name of registrant as specified in its charter)
Kentucky
(State or other jurisdiction of incorporation)
1-2918 61-0122250
(Commission File Number) (I.R.S. Employer
Identification No.)
50 E. RiverCenter Boulevard, Covington, Kentucky 41012-0391
(Address of principal executive offices) (Zip Code)
P.O. Box 391, Covington, Kentucky 41012-0391
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code (606) 815-3333
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Item 5. Other Events
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On June 22, 1999, Ashland, as a shareholder of Arch Coal,
announced that it had retained the investment banking firm of Goldman Sachs
to help Ashland explore strategic alternatives for its investment in Arch
Coal.
On October 5, 1999, Ashland announced that it was making progress
on its study to explore strategic alternatives for its investment in Arch
Coal and that, at that point, a tax-free spin-off to its shareholders
seemed to be its preferred alternative. Ashland also announced that it had
submitted a proposal to Arch Coal and had begun discussions with a special
committee of the Arch Coal Board of Directors regarding such a spin-off
transaction. Such a spin-off would have been subject, among other things,
to a negotiated agreement with the special committee of the Arch Coal Board
of Directors, approval by the Arch Coal shareholders, a favorable ruling
from the Internal Revenue Service, and approval by Ashland's Board of
Directors.
On January 24, 2000, Ashland announced that it was continuing to
pursue spin-off alternatives for its investment in Arch Coal, including
both tax-free and taxable distributions.
On February 24, 2000, Ashland announced that, absent intervening
circumstances or material events, Ashland's management intended to
recommend to its Board of Directors at the next Ashland Board meeting, to
be held on March 16, 2000, a distribution to Ashland's shareholders of
17,397,233 shares of its Arch Coal Common Stock in the form of a taxable
dividend. Ashland also announced that, in anticipation of the taxable
distribution, two of Ashland's four employees currently on the Arch Coal
Board of Directors, Paul W. Chellgren and J. Marvin Quin, will not stand
for re-election to the Arch Coal Board at Arch Coal's upcoming Annual
Meeting on April 20, 2000.
On March 16, 2000, Ashland announced that its Board of Directors
had approved a taxable distribution of 17,397,233 shares of Arch Coal
Common Stock to Ashland's shareholders, and had set a record date of March
24, 2000 for the distribution. The distribution will be a taxable event to
Ashland and will constitute dividend income to Ashland shareholders.
Ashland will retain shares of Arch Coal Common Stock to satisfy any federal
tax withholding on the distribution. Any fractional shares of Arch Coal
Common Stock resulting from the distribution will be retained by Ashland
with Ashland subsequently distributing the equivalent cash value. Arch Coal
has indicated to Ashland that the Arch Coal Common Stock distributed by
Ashland will be issued by Arch Coal's transfer agent in book-entry form by
means of direct registration effective on March 27, 2000. Also on March 27,
2000, Ashland intends to
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mail to its shareholders an information statement in respect of the
distribution. Ashland anticipates that direct registration statements
listing the number of shares of Arch Coal Common Stock received by each
Ashland shareholder will be mailed commencing on or about March 31, 2000 by
Arch Coal's transfer agent.
Following the distribution, Ashland intends, subject to
then-existing market conditions but within one year, to dispose of
Ashland's remaining 4,726,040 shares of Arch Coal Common Stock plus any
fractional shares of Arch Coal Common Stock retained pursuant to the
distribution, and any shares retained to satisfy tax withholding, in a
transaction or transactions that qualify as a sale for federal income tax
purposes.
The foregoing summary of the attached press release is qualified
in its entirety by the complete text of such document, a copy of which is
attached hereto as Exhibit 99.1.
Item 7. Financial Statements and Exhibits
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(c) Exhibits
99.1 Press Release dated March 16, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
ASHLAND INC.
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(Registrant)
Date: March 16, 2000 /s/ David L. Hausrath
-------------------------------
Name: David L. Hausrath
Title: Vice President and
General Counsel
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EXHIBIT INDEX
99.1 Press Release dated March 16, 2000
FOR ADDITIONAL INFORMATION:
Stan Lampe
(606) 815-4061
FOR IMMEDIATE RELEASE
March 16, 2000
Ashland Inc. board approves
distribution of Arch Coal shares
Covington, Ky. - The board of directors of Ashland Inc. (NYSE:
ASH) approved today a taxable distribution of 17,397,233 shares of Arch
Coal, Inc. (NYSE: ACI) stock to the Ashland Inc. shareholders, and has set
a record date of March 24.
"Initially, our preferred path was a tax-free distribution of this
stock," said Paul W. Chellgren, Ashland Inc. chairman and chief executive
officer. "However, several factors mitigated against this strategy. One was
uncertainty involved in obtaining a satisfactory ruling from the Internal
Revenue Service. Another was uncertainty associated with successfully
concluding negotiations with a special committee of the Arch board of
directors. These factors, coupled with a decline in the value of Arch
stock, led to our decision to declare a taxable dividend," Chellgren
stated.
The pro rata distribution will take the form of a dividend, that
will be taxable to the shareholders of Ashland Inc. at ordinary rates.
Based on the 70,762,855 shares of Ashland Inc. shares outstanding on March
15, and assuming no change in the number of outstanding Ashland shares
before the record date of March 24, each share of Ashland Inc. stock will
receive approximately 0.2458 shares of Arch Coal, Inc. stock. The exact
ratio of Arch shares to Ashland shares will be determined when the dividend
is issued. Any fractional shares of Arch stock, that may result from the
distribution of
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the shares will be retained by Ashland, with Ashland subsequently
distributing the equivalent cash value to the affected shareholder.
Information regarding the distribution is expected to be mailed to Ashland
shareholders on or about March 27.
After the distribution is completed, Ashland will continue to own
approximately 4.7 million Arch Coal shares. The company plans to dispose of
these shares in a tax efficient manner based on market conditions .
"Our board approved this action after significant review and
study, because we believe it is in the best interest of our shareholders,
as well as that of both companies," Chellgren said. "This will increase
Arch's float in the marketplace, remove uncertainty surrounding the future
of our holdings in Arch, and, most significantly, enable Ashland Inc. and
Arch Coal to pursue their individual value creation strategies more
effectively," he concluded.
Ashland Inc. (NYSE:ASH) provides basic industrial materials and
services to customers throughout the world, with a primary focus on
transportation-and construction-related markets. Consumer brands include
Valvoline(R) motor oils, Eagle One(R) appearance products, Zerex(R)
antifreeze, Pyroil(R) Performance Products and Valvoline SynPower(R)
automotive chemicals. In addition, Ashland owns 38 percent of Marathon
Ashland Petroleum LLC and 58 percent of Arch Coal, Inc. (NYSE:ACI).
Ashland's Internet address is http://www.ashland.com.
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