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Standard & Poor's Places Tenneco Ratings on Watch

23 July 1998

Standard & Poor's Places Tenneco Ratings on Watch, Negative Re: Restructuring

    NEW YORK, July 22 -- Standard & Poor's today placed its
ratings on Tenneco Inc. on CreditWatch with negative implications (see list
below).
    The CreditWatch placement follows today's announcement that the company is
considering major strategic actions to enhance shareholder value.  The company
stated that it plans to accelerate the separation of its containerboard
business from its specialty packaging business.  Tenneco also is considering
separating its two specialty packaging and automotive businesses into
separate, stand-alone entities.  With annual sales of $1.5 billion, Tenneco
Packaging's containerboard business includes four containerboard mills, over
70 corrugated facilities, and nearly one million acres of owned or controlled
timberland throughout the U.S.  Whatever alternative, if any, is finally
pursued will result in a less diversified company and it is uncertain whether
there would be significant debt reduction as an offset.
    As Tenneco is still reviewing various alternatives, no details regarding
the potential split-up of the remaining two businesses is available.  The
company stated that alternatives under consideration for the containerboard
business include a possible sale, merger, spin-off, initial public offering,
or strategic alliance.  The Tenneco Automotive division is a leading
manufacturer of automotive exhaust system and ride control products, and
serves the original equipment and replacement markets on a worldwide basis.
Tenneco Packaging is a major producer of packaging products for consumer,
institutional, and industrial markets.
    Tenneco indicated that it is considering the full range of structural
alternatives available, and plans to conclude its review and make
recommendations to its board this fall.  Standard & Poor's will monitor the
progress of the review and assess the impact on credit quality of the
strategic actions the company undertakes.  Any actions that lead to a
reduction in the business or financial profile of the company could result in
rating downgrades, Standard & Poor's said. -- CreditWire

    RATINGS PLACED ON CREDITWATCH WITH NEGATIVE IMPLICATIONS

                               Rating
    Corporate credit rating    BBB/A-2
    Senior debt                BBB
    Preferred stock            BBB-
    Commercial paper           A-2