THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, October 23, 1996 TAG: 9610230500
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: 46 lines
Tenneco Inc.'s planned spinoff of Newport News Shipbuilding is on schedule for December, company officials said.
``We've heard nothing from any agency that would lead us to believe anything except that we're on schedule,'' said Tenneco Chairman Dana G. Mead.
Mead's comments came as Tenneco announced Tuesday its earnings for the third quarter.
He estimated that Newport News Shipbuilding stock, which will trade on the New York Stock Exchange, will be valued at about $18 to $20 a share based on its proposed equity and debt levels.
That would give the shipyard a market value of between $600 million and $700 million.
Tenneco is taking a $600 million dividend out of the yard; Newport News Shipbuilding is borrowing to pay for the dividend.
J.P. Morgan & Co. has organized a $415 million working capital loan for the shipyard after the spinoff.
The loan will have a floating interest rate that is currently 6.75 percent.
The shipyard considers the rateattractive, said spokeswoman Jerri Fuller Dickseski. ``Despite the debt level, we'll have the ability to service the debt,'' she said.
The shipyard will borrow another $200 million of long-term debt.
The spinoff is being reviewed by the Internal Revenue Service and the Securities and Exchange Commission. Once it gets approval, Tenneco plans an early December meeting for shareholders to approve the spinoff.
Holders of Tenneco stock will get one share of Newport News Shipbuilding stock for every five shares of Tenneco stock they have at the time of the spinoff.
Meanwhile, Tenneco said Tuesday that it earned $113 million in the third quarter, down from $212 million a year earlier. On a per share basis, earnings slipped to 66 cents from $1.23.
The year-earlier results included contributions from units Tenneco has since sold. Income from continuing operations actually increased to 67 cents a share, compared with 53 cents a share a year earlier.
Tenneco's third quarter revenue was $2.8 billion compared with $2.1 billion in the quarter a year ago.
Tenneco has sold its tractor-making and chemical subsidiaries. It is merging its energy unit with another energy company and creating a new Tenneco for its packaging and auto parts business. by CNB