UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 18, 2006
ASHLAND INC.
(Exact name of registrant as specified in its charter)
Kentucky
(State or other jurisdiction of incorporation)
1-32532 20-0865835
(Commission File Number) (I.R.S. Employer Identification No.)
50 E. RiverCenter Boulevard, Covington, Kentucky 41011
(Address of principal executive offices) (Zip Code)
P.O. Box 391, Covington, Kentucky 41012-0391
(Mailing Address) (Zip Code)
Registrant's telephone number, including area code (859) 815-3333
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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Item 1.01. Entry into a Material Definitive Agreement
Today, Ashland Inc. ("Ashland") announced that it entered into a stock
purchase agreement (the "Agreement") with Oldcastle Materials, Inc.
("Oldcastle") on August 19, 2006, pursuant to which Oldcastle would
purchase all issued and outstanding shares of common stock in Ashland's
wholly owned subsidiary, Ashland Paving And Construction, Inc. (together
with its subsidiaries, "APAC"). Ashland announced the signing of the
Agreement in a press release issued on August 21, 2006, which is attached
hereto as Exhibit 99.1 and incorporated by reference herein. The parties
plan to close the transaction by the end of the month.
The purchase price for APAC under the Agreement is $1.30 billion,
subject to a post-closing adjustment for any changes in specified balance
sheet items (primarily working capital accounts) from September 30, 2005,
to the closing date. Oldcastle's obligations under the Agreement are
guaranteed by Oldcastle's United States parent, Oldcastle, Inc.
The Agreement includes customary representations, warranties and
covenants. Breaches of such provisions would be subject to mutual
indemnification obligations, certain of which would be limited by a
deductible and a cap on the amount of liability. Ashland also would agree
to indemnify Oldcastle for liabilities with respect to certain
environmental matters. A complete copy of the Agreement will be filed with
Ashland's Form 10-K for the fiscal year ending September 30, 2006, or after
closing but prior to the submission of that periodic report.
Oldcastle will be responsible for the payment of any post-closing
employment-related liabilities that arise under severance and retention
agreements that Ashland has entered into with certain employees, including
the Retention and Severance Letter Agreement for APAC President Robert K.
Randolph, entered into on August 18, 2006, which is attached hereto as
Exhibit 10.1 and provides for severance payments in the event of
termination and a retention bonus of $350,000 which would be payable by
Ashland in the event the transaction with Oldcastle failed to close.
The parties have received clearance for the transaction under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, and their other
respective obligations to close the transaction are subject to customary
conditions. The Agreement includes customary termination provisions and, in
any event, can be terminated if closing does not occur on or prior to
October 2, 2006.
Item 8.01. Other Items
Today, Ashland also announced in the press release referenced in Item
1.01 above that, at the company's September board meeting, Ashland
management intends to recommend to its board of directors that
substantially all of the net after-tax proceeds from the sale of APAC be
used to fund the completion of the existing share repurchase authorization,
an additional share repurchase authorization and a special cash dividend.
The aggregate share repurchases under the existing authorization and, if
approved, the additional share repurchase authorization would be limited to
approximately 10 million
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shares. There can be no assurance that the board of directors will accept
management's recommendation. Item 9.01. Financial Statements and Exhibits
(d) Exhibits
10.1 Retention and Severance Letter Agreement for Robert K. Randolph
entered into on August 18, 2006.
99.1 Press Release dated August 21, 2006.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements include those that refer to
Ashland's operating performance and expectations about the APAC
transaction, including those statements that refer to the expected benefits
of the transaction and management's recommendation of anticipated use of
proceeds and expected benefits to Ashland's shareholders. Although Ashland
believes its expectations are based on reasonable assumptions, it cannot
assure the expectations reflected herein will be achieved. The risks,
uncertainties and assumptions include the possibility that Ashland will be
unable to fully realize the benefits anticipated from the transaction, the
possibility that the transaction may not close, and other risks that are
described from time to time in the Securities and Exchange Commission (SEC)
reports of Ashland. Other factors and risks affecting Ashland are contained
in Ashland's Form 10-K, as amended, for the fiscal year ended Sept. 30,
2005, filed with the SEC and available on Ashland's Investor Relations
website at www.ashland.com/investors or the SEC's website at www.sec.gov.
Ashland undertakes no obligation to subsequently update or revise the
forward-looking statements made in this news release to reflect events or
circumstances after the date of this report.
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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.
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(Registrant)
August 21, 2006 /s/ J. Marvin Quin
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J. Marvin Quin
Senior Vice President
and Chief Financial Officer
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EXHIBIT INDEX
10.1 Retention and Severance Letter Agreement for Robert K. Randolph
entered into on August 18, 2006.
99.1 Press Release dated August 21, 2006.
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EXHIBIT 10.1
[GRAPHIC OMITTED]
Susan B. Esler Ashland Inc.
Vice President, Human Resources 50 E. RiverCenter Blvd.
P.O. Box 391
Covington, KY 41012-0391
Tel: 859 815-3543, Fax: 859 815-3693
August 15, 2006
- Via Federal Express -
Robert K. Randolph
130 Millwick Cove
Alpharetta, GA 30005
Dear Kirk:
Ashland Inc. ("Ashland") considers the services you provide as the
President of the APAC group of companies ("APAC") to be essential to its
continuing operations. Due to the potential change in ownership of APAC
("the Transaction"), Ashland would like to extend the following offer to
you, in order to encourage your continued employment during this transition
period. Your acceptance of this offer (the "Letter Agreement") will rescind
and replace any other written or verbal agreements in place between you and
Ashland and/or APAC concerning your continued employment prior to the close
of the Transaction and the severance benefits you are eligible to receive
upon a termination of your employment.
Subject to the conditions provided in this Letter Agreement, in the
event you remain employed through the date on which one of the following
events occurs (your "Stay Date"), then Ashland will provide you with a lump
sum payment ("Retention Bonus") of $350,000, less applicable withholdings,
to be paid within 15 days of your Stay Date.
Your Stay Date will be determined as follows:
i) In the event your active employment with Ashland ends prior to
the close of the sale of APAC, then your Stay Date will be your
last day of active employment with Ashland;
ii) In the event you accept an offer of employment from the purchaser
of the APAC business (the "Buyer"), your Stay Date will be the
earlier of 6 months from the date of your transfer to Buyer, or
the date on which you are released from active employment by the
Buyer;
iii) In the event your position with Ashland is eliminated at the
close of the Transaction, and you are not offered employment with
the Buyer, or you reject an offer of non-equivalent employment
from the Buyer, then your Stay Date will be your last day of
active employment with Ashland; For the purpose of this offer
"equivalent employment" means an offer of employment that
provides you with base compensation of at least the
Robert K. Randolph
August 15, 2006
Page 2 of 4
same amount you are receiving in your current position, at a work
location not more than 50 miles from your current work location.
iv) In the event your active employment with Ashland does not end at
the close of the Transaction, and you continue to provide
transitional support to Ashland relating to the APAC business,
then your Stay Date will be the earlier of 24 months from the
date of the close of the Transaction, or your last day of active
employment with Ashland;
v) In the event the Transaction does not occur, then your Stay Date
will be the date on which negotiations with potential buyers of
APAC have concluded without an agreement for the sale of the
business, and the decision is made not to seek other prospective
buyers for the APAC business.
In the event your active employment with Ashland terminates as a
result of the Transaction, and you meet the conditions for receipt of
severance benefits under the APAC Divestiture Severance Program for
Executive Level Employees, a copy of which is enclosed, then in addition to
the Retention Bonus provided for above, Ashland will offer to you a
Separation Agreement and General Release, which will provide you with
severance benefits under this program, with the following exceptions:
i) your severance benefit shall be payroll continuation payments for
the 24-month period following your Release Date;
ii) you will continue to earn age and service credit for pension
calculation purposes during your entire payroll continuation
period;
iii) although you are not retirement eligible, during your payroll
continuation period you will be eligible to participate in
company provided employee benefit programs as though you were a
retirement eligible employee;
v) any award you would otherwise be eligible to receive under any
incentive compensation program in which you were a participant
during FY 2006 will be calculated as though your were actively
employed for the full year, regardless of whether your active
employment ends prior to September 30, 2006.
Your employment will then terminate on the last day of your payroll
continuation period, and thereafter your treatment under Ashland's employee
benefit plans will be on the same terms and conditions as apply to
non-retirement eligible employees. Provided that all your Ashland Inc.
stock options issued prior to September 2006, that continued to vest during
your payroll continuation period, will become fully vested as of your
termination date, and will thereafter be fully exercisable for their
remaining term(s).
Robert K. Randolph
August 15, 2006
Page 3 of 4
You understand that your Separation Agreement and General Release will
contain a general release of any claims you may have against Ashland which
you must sign as a condition of receiving these severance benefits. You
further understand that these severance benefits will be in lieu of any
benefits you would otherwise be eligible to receive upon termination under
the terms of your Executive Employment Agreement.
In addition to the above referenced severance benefits, on your last
day of active employment with Ashland (your "Release Date") a pro-rata
share of the restricted stock previously granted to you by Ashland will
become fully vested. The pro-rata vesting schedule will be calculated based
on the number of shares issued to you, multiplied by the percentage of the
total grant period that has elapsed as of your Release Date.
During the term of this Letter Agreement, you will continue to receive
compensation at a rate at least equivalent to your level of base pay in
effect at the time this Agreement is executed. Ashland agrees that you will
also continue to be eligible to participate in those employee benefits in
which you are a current participant to the same extent as other regular
full-time employees, including participation in applicable incentive
compensation plans.
You agree that you will keep the terms of this Letter Agreement, as
well as the terms of the earlier retention agreements offered to you,
completely confidential, and that you will not hereafter disclose any
information concerning any of these agreements to anyone except your
immediate family, financial advisor and/or attorney; provided, that they
agree in advance of said disclosure to keep this information confidential
and not disclose it to others.
You further understand that this agreement will immediately terminate
(an "Early Termination"), and Ashland will be relieved of any obligation to
provide the Retention Bonus or the additional benefits described above if
any of the following occurs during the term of this Agreement:
i) you voluntarily terminate your employment with Ashland;
ii) you elect to accept a different position with Ashland that does
not support the APAC business;
iii) you violate the confidentiality provisions contained herein;
iv) Ashland or Buyer terminates your employment for cause; For the
purposes of this letter, termination for cause will arise if you:
(a) substantially fail to perform your duties with Ashland or
Buyer, unless such failure is due to your incapacity as a result
of physical or mental illness; or (b) you engage in willful
misconduct or gross negligence in performing your duties;
Robert K. Randolph
August 15, 2006
Page 4 of 4
v) you become disabled and you become eligible to receive payments
under Ashland's Long Term Disability Plan at any time thereafter;
or
vi) in the event of your death. Provided, however, that Ashland will
not be relieved of any obligations under its employee benefits
plans which arise due to your death.
This Letter Agreement shall terminate on the earlier of i) your Stay
Date or ii) the date on which an Early Termination occurs. Provided,
however, that the confidentiality provisions of this Letter Agreement and
any obligations on the part of Ashland arising under this Letter Agreement
during its term, or triggered under this Letter Agreement on the date of
its termination, shall survive the termination of this Letter Agreement.
This Letter Agreement does not, in any way, constitute a contract or
agreement guaranteeing your continued employment. Ashland reserves the
right to terminate your employment at any time, with or without cause.
If you agree with the foregoing, please sign and date each original of
this Letter Agreement in the space provided for your signature and fax a
copy of this executed agreement to me at (859) 815-3823 no later than the
close of business on August 18, 2006. Please then return one signed
original to me by regular mail that same day. You may retain the other
enclosed original for your records.
Should you have any questions, please feel free to contact me.
Sincerely yours,
/s/ Susan B. Esler
------------------------
Susan B. Esler
Agreed to and accepted
this 18 day of August, 2006.
/s/ Robert K. Randolph
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Robert K. Randolph
cc: David L. Hausrath
EXHIBIT 99.1
[GRAPHIC OMITTED]
FOR ADDITIONAL INFORMATION:
Media Relations: Investor Relations:
Jim Vitak Daragh Porter
(614) 790-3715 (859) 815-3825
jevitak@ashland.com dlporter@ashland.com
FOR IMMEDIATE RELEASE
August 21, 2006
ASHLAND INC. TO SELL APAC
TO OLDCASTLE MATERIALS, INC., FOR $1.30 BILLION
COVINGTON, Ky. - Ashland Inc. (NYSE: ASH) today announced that it has
signed a definitive agreement to sell the stock of its wholly owned
subsidiary, Ashland Paving And Construction, Inc. ("APAC"), to Oldcastle
Materials, Inc., for $1.30 billion, the final price to be adjusted for
changes in working capital and certain other accounts from Sept. 30, 2005,
until closing. After-tax proceeds, pre-adjustment, are estimated to total
$1.25 billion. The transaction, which has received antitrust clearance, is
expected to close by the end of the month, subject to the satisfaction of
customary closing conditions.
At the company's September board meeting, Ashland management intends
to recommend to its board of directors that substantially all of the net
after-tax proceeds from this transaction be used to fund the completion of
the existing share repurchase authorization, an additional share repurchase
authorization and a special cash dividend. The aggregate share repurchases
under the existing authorization and, if approved, the additional share
repurchase authorization would be limited to approximately 10 million
shares. There can be no assurance that the board of directors will accept
management's recommendation.
"Today, Ashland sharpens its focus on its future as a diversified
chemical company," said James J. O'Brien, Ashland's chairman and chief
executive officer. "When the transaction is completed, Ashland will consist
of its four chemical divisions: Ashland Performance Materials, Ashland
Distribution, Valvoline and Ashland Water Technologies."
Continuing, Mr. O'Brien said, "While Ashland has been pleased with
APAC's recent performance, the sale to Oldcastle is an important step in
achieving Ashland's strategic objectives. In addition to our recommended
use of proceeds, we continue to focus on creating
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Ashland Inc. - Covington, Ky. - 41012-0391 - (859) 815-3333 - www.ashland.com
Ashland Inc. to sell APAC to Oldcastle Materials for $1.30 billion, pg.2
long-term value for Ashland's shareholders. We have the financial
flexibility to pursue organic growth and seek acquisitions that complement
and strengthen our core chemical businesses."
In connection with the transaction, Credit Suisse Securities (USA) LLC
acted as financial advisor, and Cravath, Swaine & Moore LLP acted as legal
counsel to Ashland.
Today at 10 a.m., EDT, Ashland will conduct a conference call and
audio webcast for securities analysts. The event will be accessible through
Ashland's Investor Relations website, www.ashland.com/investors. Afterward,
an archived version of the webcast will be available on the Ashland website
for 12 months. Minimum requirements to listen to the webcast include the
free Windows MediaPlayer software and a 28.8 Kbps connection to the
Internet.
With approximately 9,700 employees, APAC currently operates in 14
Southern and Midwestern states and has 93 aggregate production facilities,
including 36 permanent operating quarry locations; 31 ready-mix concrete
plants; 226 hot-mix asphalt plants and more than 13,000 pieces of mobile
equipment.
Ashland Inc. (NYSE: ASH) is a FORTUNE 500 chemical and transportation
construction company providing products, services and customer solutions
throughout the world. To learn more about Ashland, visit www.ashland.com.
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FORTUNE 500 is a registered trademark of Time Inc.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These statements include those that refer to
Ashland's operating performance and expectations about the APAC
transaction, including those statements that refer to the expected benefits
of the transaction and management's recommendation of anticipated use of
proceeds and expected benefits to Ashland's shareholders. Although Ashland
believes its expectations are based on reasonable assumptions, it cannot
assure the expectations reflected herein will be achieved. The risks,
uncertainties and assumptions include the possibility that Ashland will be
unable to fully realize the benefits anticipated from the transaction, the
possibility that the transaction may not close, and other risks that are
described from time to time in the Securities and Exchange Commission (SEC)
reports of Ashland. Other factors and risks affecting Ashland are contained
in Ashland's Form 10-K, as amended, for the fiscal year ended Sept. 30,
2005, filed with the SEC and available on Ashland's Investor Relations
website at www.ashland.com/investors or the SEC's website at www.sec.gov.
Ashland undertakes no obligation to subsequently update or revise the
forward-looking statements made in this news release to reflect events or
circumstances after the date of this release.