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): January 1, 1998
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.)
1000 Ashland Drive, Russell, Kentucky 41169
(Address of principal executive offices) (Zip Code)
P.O. Box 391, Ashland, Kentucky 41114
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code (606) 329-3333
Item 2. Acquisition or Disposition of Assets
Effective January 1, 1998, Ashland Inc. (the "Registrant") and
Marathon Oil Company ("Marathon") completed a transaction to form
Marathon Ashland Petroleum LLC, a Delaware limited liability company
(the "Company"). On January 2, 1998, the Registrant and Marathon
jointly announced the closing of the transaction. Definitive agreements
creating the venture were signed December 12, 1997. Plans to pursue the
combination were announced May 15, 1997, when the parties executed a
Letter of Intent. The foregoing summary of the attached January 2, 1998
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.
Pursuant to a Master Formation Agreement between the Registrant
and Marathon; an Asset Transfer and Contribution Agreement by and among
the Registrant, Marathon and the Company; a Parent Agreement by and
among USX Corporation, the parent of Marathon ("USX"), Marathon and the
Registrant; and certain other conveyancing documents, the Registrant
and Marathon contributed the major elements of their respective
petroleum supply, refining, marketing and transportation businesses to
the Company in exchange for, in the case of the Registrant, a 38%
ownership interest in the Company and, in the case of Marathon, a 62%
ownership interest in the Company. The Registrant's and Marathon's
other businesses, including their respective exploration, production
and chemical businesses (other than the Registrant's refinery-produced
chemicals) were not contributed to the Company. Other exclusions
include the Registrant's Valvoline division and APAC construction
subsidiary, along with equity investments in certain pipelines for both
companies.
In connection with the formation of the Company, the Registrant
and Marathon entered into a Limited Liability Company Agreement dated
as of January 1, 1998 (the "LLC Agreement"). The LLC Agreement provides
that the Company will be managed by a Board of Managers consisting of
the President of the Company (with no voting power), three
representatives designated by Marathon, and two representatives
designated by the Registrant. The LLC Agreement provides for an initial
term of the Company expiring on December 31, 2022 (25 years from its
formation). The term will automatically be extended for successive ten
year periods unless at least two years prior to the end of a term,
either the Registrant or Marathon gives notice to the other party that
it wants to terminate the term of the Company.
The foregoing description of the LLC Agreement is qualified in its
entirety by reference to the provisions of such agreement, which is
attached hereto as Exhibit No. 10.1
In connection with the formation of the Company, Marathon, the
Registrant, the Company and USX Corporation also entered into a
Put/Call, Registration Rights and Standstill Agreement (the "Put/Call
Agreement"). The Put/Call Agreement provides that at any time after
December 31, 2004, Marathon will have the right to purchase from
Registrant for cash, and the Registrant will have the right to sell to
Marathon for cash and/or, at Marathon's option (subject to certain
limitations), Marathon or USX debt or equity securities, all the
Registrant's ownership interests in the Company, on the terms provided
in the Put/Call Agreement. The Put/Call Agreement contains registration
rights with respect to any debt or equity securities of Marathon or USX
that the Registrant receives. The Put/Call Agreement also sets forth
various standstill agreements between certain of the parties and
limitations on each party's ability to engage in activities that are
competitive with certain businesses of one or more of the other
parties.
The foregoing description of the Put/Call Agreement is qualified
in its entirety by reference to the provisions of such agreement, which
is attached hereto as Exhibit No. 10.2.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
Any required financial statements will be filed under cover of
Form 8K/A as soon as practicable, but not later than March 17, 1998.
(b) Pro Forma Financial Information
Since the Registrant has a 38% ownership interest in the Company,
it will account for its investment using the equity method of accounting.
Although this method of accounting has no effect on Registrant's net income
or stockholders' equity, it will reduce Registrant's consolidated assets,
liabilities, revenues and costs. Financial information follows with respect
to the businesses contributed to the Company as of September 30, 1997, and
for the year then ended.
(In millions)
FINANCIAL POSITION
Current assets $ 868
Investments and other assets 66
Property, plant and equipment 1,715
------------
Total assets 2,649
Current liabilities (738)
Noncurrent liabilities (186)
------------
Net assets $ 1,725
============
RESULTS OF OPERATIONS
Revenues $ 6,700
Operating income 215
Net income 136
Registrant's condensed financial statements included in its
Quarterly Report on Form 10-Q for the three months ending March 31, 1998
will reflect the change in accounting method for its businesses contributed
to the Company, retroactive to October 1, 1997, the beginning of the
Registrant's current fiscal year.
Since the values assigned to the assets contributed to the Company
by the Registrant have not yet been determined, it is impracticable to
provide pro forma financial information related to the effects of the
transaction at this time. Any required pro forma financial information will
be filed under cover of Form-8K/A as soon as practicable, but not later
than March 17, 1998.
(c) Exhibits
10.1 Limited Liability Company Agreement of Marathon Ashland
Petroleum LLC dated as of January 1, 1998.
10.2 Put/Call, Registration Rights and Standstill Agreement dated
as of January 1, 1998 among Marathon Oil Company, USX
Corporation, Ashland Inc. and Marathon Ashland Petroleum LLC.
99.1 Press Release dated January 2, 1998.
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.
(Registrant)
Date: January 16, 1998 /s/ Thomas L. Feazell
--------------------------------
Name: Thomas L. Feazell
Title: Senior Vice President,
General Counsel and Secretary
Exhibit Index
Exhibit No.
10.1 Limited Liability Company Agreement of Marathon Ashland
Petroleum LLC dated as of January 1, 1998.
10.2 Put/Call, Registration Rights and Standstill Agreement dated
as of January 1, 1998 among Marathon Oil Company, USX
Corporation, Ashland Inc. and Marathon Ashland Petroleum LLC.
99.1 Press Release dated January 2, 1998.