Tenneco Proxy Proposes One-for-five Reverse Stock Split
22 September 1999
Tenneco Proxy Proposes One-for-five Reverse Stock Split for Automotive Company, and Annual Election of Directors, Eliminating Current Staggered Classification, as Separation of Two Tenneco Companies Proceeds
GREENWICH, Conn.--Sept. 21, 1999--In a proxy statement today, Tenneco presented its shareowners amendments that will, when Tenneco Automotive becomes an independent, publicly traded company: 1) provide for the annual election of directors, eliminating the current classification of the Company's board of directors with three classes of directors serving staggered three-year terms; and 2) effect a one-for-five reverse stock split of the automotive company's common stock.The special meeting of Tenneco shareowners to consider the two amendments proposed in the proxy will be Monday, October 25, 1999 at the offices of Tenneco Automotive, located at 500 North Field Drive, in Lake Forest, Ill.
The amendments, if adopted, would take effect only after the Company's planned spin-off of its packaging business, which is currently scheduled for November 1999. However, these amendments are not required in order to complete the spin-off. Tenneco plans to go forward with the spin-off even if the amendments are not approved.
The amendments would apply solely to a shareowner's remaining interest in Tenneco, which upon the spin-off will include only the Company's automotive business and will be renamed, "Tenneco Automotive Inc." The reverse stock split will not effect the packaging company's stock when it is issued.
The Company believes that the reverse stock split could position the remaining automotive company more attractively with institutional investors who generally have restrictions on investing in low-priced stocks and retail brokers who are often not inclined to invest in low-priced stocks. The Company also believes that providing for the annual election of directors could position the Company more attractively with the investment community, who may view classified boards as reducing director accountability to shareowners.
BACKGROUND
In July 1998, the Company's Board of Directors authorized the Company's management to develop a broad range of strategic alternatives which could result in the separation of the Company's automotive, paperboard packaging and specialty packaging businesses.
In September, 1999, the Company was informed by Packaging Corporation of America ( PCA) that the registration statement for PCA's planned initial public offering (IPO) including the Tenneco equity interest has been filed with the Securities and Exchange Commission (SEC). This transaction is on schedule and will proceed soon.
In addition, as part of the Company's strategic alternatives analysis, it also has taken the following actions:
| -- | In January 1999, the Company reached an agreement to contribute the containerboard assets of its paperboard packaging segment to a new joint venture with an affiliate of Madison Dearborn Partners, Inc. The contribution of the containerboard assets to the joint venture was completed in April 1999, resulting in PCA. The Company received consideration of cash and debt assumption totaling approximately $2 billion and a 45 percent common equity interest in the joint venture (now 43 percent due to subsequent management equity issuances); |
| -- | In April 1999, the Company reached an agreement to sell the paperboard packaging segment's other assets, its folding carton operations, to Caraustar Industries. This transaction closed in June 1999; |
| -- | Also in April 1999, the Company announced that it had approved the separation of its automotive and packaging businesses into two separate, independent companies; |
| -- | In June 1999, the Company approved a plan to sell its remaining interest in its containerboard joint venture. The Company expects the sale to be completed before the spin-off of the new packaging company; |
| -- | In August 1999, the Company received a private letter ruling from the Internal Revenue Service (IRS), which states that Tenneco's planned spin-off of Tenneco Packaging will be tax free to Tenneco and its shareowners; |
| -- | The Company also has made a number of filings with the SEC which maintain the projected timetable for separating Tenneco Automotive and Tenneco Packaging in the fall. |
The registration statement relating to the sale of Tenneco's common stock in PCA has been filed with the SEC but has not yet become effective. The securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any state in which an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities of any such state. When available, copies of the preliminary prospectus may be obtained from Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004
Tenneco is a $6 billion manufacturing company headquartered in Greenwich, Conn., with 38,000 employees worldwide. Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroe(R) and Walker(R) global brand names. Among its products are Sensa-Trac(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(TM) mufflers and DynoMax(TM) performance exhaust products, and Monroe(R) Clevite(TM) vibration control components. Tenneco Packaging is among the world's leading and most diversified packaging companies. Among its products are Hefty(R) trash bags, Hefty OneZip(R) and Baggies(R) food storage bags, E-Z Foil(R) single-use aluminum cookware and Hexacomb(R) paper honeycomb products.
Several statements in this press release are forward looking and are identified by the use of forward looking words and phrases, such as "scheduled," "expects," "plans," "planned," "could position," "could result," "will," "is on schedule," "maintain" and "projected." These forward looking statements are based on the current expectations of the Company (including its subsidiaries). Because forward looking statements involve risks and uncertainties, the Company's plans, actions and actual results could differ materially. Among the factors that could cause plans, actions and results to differ materially from current expectations are: (i) the general political, economic and competitive conditions in markets and countries where the Company and its subsidiaries operate, including currency fluctuations and other risks associated with operating in foreign countries; (ii) governmental actions, including the ability to receive regulatory approvals and the timing of such approvals; (iii) change in capital availability or costs; (iv) results of analysis regarding plans and strategic alternatives; (v) changes in consumer demand and prices, including decreases in demand for the Company's products and the resulting negative impact on its revenues and margins from such products; (vi) the cost of compliance with changes in regulations, including environmental regulations; (vii) workforce factors such as strikes or labor interruptions; (viii) material substitutions and increases in the costs of raw materials; (ix) the ability of the Company and its subsidiaries to integrate operations of acquired businesses quickly and in a cost-effective manner; (x) new technologies; (xi) the ability of the Company, its subsidiaries and those with whom they conduct business to timely resolve the Year 2000 issue (relating to potential equipment and computer failures by or at the change of the century), unanticipated costs of, problems with, or delays in resolving the Year 2000 issue, and the costs and impacts if the Year 2000 issue is not timely resolved; (xii) changes by the Financing Accounting Standards Board or other accounting regulatory bodies of authoritative generally accepted accounting principles or policies; and (xiii) the timing and occurrence (or non-occurrence) of transactions and events which may be subject to circumstances beyond the control of the Company and its subsidiaries..