Wednesday, June 23, 1999

Ashland considers selling coal interest


Goldman Sachs to analyze options

BY MIKE BOYER
The Cincinnati Enquirer

        Ashland Inc. said Tuesday it has hired an investment firm to weigh strategic options, including possible sale of its investment in Arch Coal Inc.

        St. Louis-based Arch Coal, the nation's second-largest coal company, with coal reserves in seven states, is 58 percent owned by Ashland.

        “Arch Coal is a strong competitor in the coal industry, and we believe in the future of coal as the primary source to generate America's electricity,” said Paul Chellgren, Ashland's chairman and CEO. “However, we are reviewing the fit between the strategic goals of Ashland and of Arch in order to enhance the prospects for each.”

        Mr. Chellgren has led efforts to refocus Covington-based Ashland on faster-growing, less capital-intensive businesses, including the spinoff of its oil refining and marketing unit into Marathon Ashland Petroleum (MAP), a joint venture with Marathon Oil.

        Ashland said it has retained Goldman Sachs to conduct the strategic review but said it was too early to discuss specific alternatives or timing.

        Arch Coal, formed in July 1997 by the merger of Arch Mineral Corp. and Ashland Coal Inc., said in a statement that Ashland's decision wouldn't have any immediate impact on its operations.

        Ashland's shares closed Tuesday at $41, down 75 cents, while Arch Coal shares closed at $13.811/4, up 311/4 cents.

        During an analysts meeting in Atlanta, Mr. Chellgren said he expects Ashland's results for the third quarter ending June 30 to be “roughly in line” with the consensus Wall Street estimate of $1.22 a share, excluding unusual items.

        In the June quarter last year, Ashland's comparable results were $1.58 a share.

        While Ashland's wholly owned businesses should perform well, Mr. Chellgren said, results from Arch Coal and MAP are expected to be lower than last year, excluding MAP inventory adjustments, due to lower coal prices and refining margins.

       



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