EXHIBIT 99(b)
[TENNECO LETTERHEAD APPEARS HERE]
NEWS RELEASE
MEDIA CONTACT: Mike Bazinet (203) 863-1073
TENNECO ANNOUNCES AGREEMENT TO MERGE TENNECO ENERGY
WITH EL PASO ENERGY CORPORATION
VALUE OF TRANSACTION TO TENNECO SHAREOWNERS $4 BILLION
GREENWICH, Conn., June 19, 1996 -- Tenneco announced today that it has
signed a definitive agreement to merge one of its four operating divisions,
Tenneco Energy, with El Paso Energy Corporation. This merger is part of the
larger Tenneco reorganization announced in March, which includes spinoffs to its
shareholders of Newport News Shipbuilding and Automotive/Packaging businesses as
separate public companies. The Automotive/Packaging business will be renamed
Tenneco Inc. following the reorganization.
The agreement represents a total value for Tenneco shareowners of $4
billion. This value includes:
. New shares of El Paso Energy equity valued at $750 million.
. Assumption by El Paso Energy of $2.65 billion of Tenneco's existing debt and
preferred stock.
. Assumption by El Paso Energy of approximately $600 million of Tenneco Inc.
liabilities and other considerations.
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"This agreement with El Paso Energy is an excellent one for Tenneco, Tenneco
shareowners and Tenneco Energy," said Dana G. Mead, Tenneco chairman and chief
executive officer. "As the single largest financial and strategic event in our
efforts to transform Tenneco into an industrial growth company, it brings into
clearer focus the Tenneco of the future. This transaction, combined with the
spinoff of Newport News Shipbuilding will create a powerful new Tenneco -- a
global manufacturing company in automotive and packaging with a strong balance
sheet, leading market positions and products and high profitability."
"Financial benefits from these actions will give us greater flexibility to
accelerate our progress, and should reduce Tenneco's debt to less than 30
percent of total capital, creating substantial financial flexibility for
acquisitions and internal investments in packaging and automotive parts.
"Tenneco shareowners will receive an ownership stake in El Paso Energy, a
company with a proven track record of success and growth," Mead said. "For
Tenneco Energy, the merger with El Paso Energy will create enhanced
opportunities in marketing and operations. The combined company will be one of
the nation's three largest transportation systems for natural gas -- and the
only one with coast-to-coast capabilities. The customers will be the ultimate
beneficiaries."
The merger of Tenneco Energy with El Paso Energy marks the third separation
of a major division from Tenneco in the past 15 months as Tenneco has
accelerated its efforts to create strategic focus and capture enhanced
shareholder value.
The initial public offering in March 1995 of 100 percent of Albright &
Wilson, the U.K.-based chemicals company, raised $819 million in cash and
dividends.
One of the largest sales in this asset redeployment program was completed
this past March when Tenneco received approximately $700 million from the sale
of its final 21 percent ownership of Case Corporation, a manufacturer of
agricultural and construction equipment. In the aggregate, Tenneco realized a
total of $4.4 billion in financial benefits from the sale of Case, which was
completed last March.
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Overall, including major asset sales, debt transfer and other related
benefits, Tenneco has captured financial value amounting to $5.5 billion since
June 1994 and has redeployed that capital into $2.4 billion in acquisitions,
$750 million in stock repurchases, and substantial debt reduction.
The merger agreement with El Paso Energy has been approved by directors of
both companies. The merger is not contingent upon approval of El Paso
shareholders. In the event the issuance of $750 million of common stock is not
approved by El Paso shareholders, El Paso will issue a combination of common and
preferred stock with an aggregate value of $750 million. The agreement is
contingent upon the approval of Tenneco shareowners with a vote expected to be
scheduled for this fall. The agreement also is subject to a favorable tax-free
ruling from the Internal Revenue Service. That request is expected to be
submitted by the end of the month.
Tenneco announced on March 21 that it intended to accelerate its
transformation into a global manufacturing company, focused on its packaging and
automotive parts businesses. To accomplish this, the company said then that it
intended to spin-off Newport News Shipbuilding to Tenneco shareowners and to
separate Tenneco Energy from Tenneco's packaging and automotive parts divisions
through either a tax-free spinoff, a sale, tax-free merger or other action.
Newport News Shipbuilding, based in Newport News, Va., is the largest and
most profitable shipyard in North America, with 18,000 employees. It reported
$160 million in operating income in 1995, on revenues of $1.8 billion. It is
anticipated that the capital structure for a spinoff will include an employee
stock ownership plan.
Tenneco Energy, with headquarters in Houston, operates one of the nation's
largest natural-gas transportation systems, delivering 15 percent of total U.S.
supplies of natural gas to customers in 20 states, primarily in the Midwest and
Northeast. The division also has expanded internationally with development
projects in gas transmission and electric power generation in Australia, Europe,
Latin America and the Pacific Rim. Tenneco Energy earned $333 million in
operating income in 1995 on $1.9 billion in revenues. It has 18,200 miles of
pipeline and 3,200 employees.
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El Paso Energy, with headquarters in El Paso, Texas, owns and operates one
of the largest mainline transmissions in the United States, with 7,700 miles of
gathering systems connected to more than 10,000 wells in the San Juan, Anadarko,
and Permian basins, East Texas and North Louisiana. It has current gathering
volumes of 1.9 billion cubic feet per day including processing and treating
volumes of 650 million cubic feet per day. Its first quarter 1996 throughput was
3.7 billion cubic feet per day. El Paso Marketing is one of the top ten
nationwide providers of natural gas and power marketing services with current
sales volumes of 3.3 billion cubic feet per day.
By year-end when all of the contemplated strategic actions are complete,
Tenneco shareowners will hold stock in three distinct companies -- El Paso
Energy as a result of this merger, Newport News Shipbuilding, resulting from the
tax-free spinoff of that company, and shares in the new Tenneco comprised of
Tenneco Packaging, Tenneco Automotive, and Tenneco Business Services.
Tenneco Packaging and Tenneco Automotive are both leaders in their markets;
their combined operations are expected to generate revenues of between $7
billion and $8 billion in 1996. Their current employment is 38,200, including
12,000 outside North America, and the divisions operate more than 170 facilities
worldwide. Growth targets include doubling revenues and tripling operating
income in four years by a combination of acquisitions, internal growth and
continued improvement in operating performance.
Tenneco Business Services (TBS), Tenneco's shared administrative services
subsidiary based in The Woodlands, Texas, consolidates and streamlines
companywide administrative programs such as purchasing, information systems,
payroll, accounting, and legal activities. TBS is projected to achieve its 1996
targets of $90 million in gross cost savings within Tenneco and contribute an
estimated $35 million to operating income.
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Tenneco (TEN:NYSE) is a diversified industrial corporation with 1995 sales
of $8.9 billion and 1996 projected sales of $10.5 billion. Tenneco owns and
manages businesses in four major sectors: packaging (Tenneco Packaging),
automotive parts (Tenneco Automotive), natural gas transportation and marketing
(Tenneco Energy), and ship design construction and repair (Newport News
Shipbuilding). Tenneco's corporate management center is located in Greenwich,
Conn.
Certain information included in this press release is forward looking and
involves risks and uncertainties, including general economic and competitive
conditions that could significantly impact expected results.
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