Eastman Kodak to spin off Eastman Chemical Eastman Kodak will spin off its Eastman Chemical division, the 10th largest U.S. chemical producer, with $3.9 billion in sales. Eastman Chemical will become an independent company with its own listing on the New York Stock Exchange by the end of this year. The move, announced in New York last week, has long been anticipated within both the chemical and financial communities. The plan calls for Eastman Kodak to issue new shares of Eastman Chemical stock to shareholders in proportion to their current holdings, pending Internal Revenue Service approval of the distribution as tax free. Kodak will not hold any ownership in Eastman Chemical. The combined dividend of the two companies should equal the current Kodak dividend of $2.00 a share. The 53-year-old Eastman Chemical will set off on its independent course saddled with $2 billion in debt, its share of parent Kodak's current $7.2 billion in debt, largely incurred when it bought Sterling Winthrop in 1988 for $5.1 billion. Kay R. Whitmore, chairman of Kodak, says the $2 billion should not overly burden the new Eastman Chemical, which he predicts will still be able to achieve an investment-grade rating. However, the spin-off may adversely affect Kodak. Standard & Poor's, the New York-based credit rating agency, warned that Kodak's "credit quality could be weakened by the loss of the well-positioned and profitable chemicals unit and the diversification it brings to the Kodak business portfolio." Earnest W. Deavenport, group vice president of Eastman Chemical, and the man who will head the newly autonomous chemical operations, was clearly delighted with Eastman Chemical's prospects at last week's news conference. Eastman, he says, will be able to sharpen its focus on its core acetyls, polyesters, olefins, and organic synthesis businesses. It will have "more efficient access to capital markets," and will also be able to link its stock's performance to market value. With Eastman Chemical making up only 20% of Kodak's $20 billion in sales, in the past there has been little link between the company's stock price and the chemical subsidiary's performance, he notes.
Although full details of the separation still must be worked out, Whitmore says Eastman Chemical will continue to supply Kodak with photographic intermediates, but under license to Kodak, which will retain production patent rights. Davenport notes that Kodak is Eastman Chemical's most important customer, purchasing some $300 million to $350 million in materials (8 to 9% of sales) including not only specialties, but commodity products as well. He speculates that Kodak will soon "want to benchmark" for the commodities it now pur-
chases from Eastman Chemical against those of other suppliers once the two companies are separated. As for Kodak after the breakup, Whitmore told reporters the company intends to focus on its core photographic, copier, and health care businesses. He suggested that personnel cuts, particularly in Rochester, N.Y., and sales of some smaller assets are still under consideration at Kodak. No personnel cuts are anticipated at this time for Eastman Chemical. Marc Reisch
Clinton forms sustainable development council On June 14, the anniversary of the are not successful [in confronting enviEarth Summit in Brazil, President Bill ronmental issues], we simply are not Clinton created a new White House ad- going to exist." visory group called the President's By bringing together leaders from so Council on Sustainable Development. many sectors, Lash says, "we can change The council will strive to create policies the way national environmental policy is that encourage economic growth, job made—from confrontation to partnercreation, and, at the same time, envi- ship—from gridlock to progress." ronmental protection. The goal of the council is to develop In announcing the council, President a national strategy for sustainable deClinton said, "Every nation faces a velopment that can be implemented by challenge to identify and implement both public and private sectors. The policies that will meet the needs of the council will formulate part of the U.S. present without compromising the fu- plan that will be submitted to the Unitture. America will meet that challenge ed Nations Commission on Sustainable with the help of this council and the Development. The commission is the ideas and experience its members bring international body created at the Earth to this important task." Summit to oversee implementation of David T. Buzzelli, vice president and Agenda 21—the comprehensive intercorporate director of environment, national policy declaration that nations health and safety, and public affairs for agreed to at the summit. Dow Chemical, and Jonathan Lash, The council will divide into commitpresident of the World Resources Institute, an environmental think tank in Washington, D.C., were named cochairmen of the council. The council has 25 members who include five Cabinet secretaries, as well as industry officials, environmental activists, civil rights leaders, and academicians. The business community is eager to help shape "bold new environmental approaches that change the course of their companies," Buzzelli says. "We'll try to figure out how to get small, medium, and large businesses moving in the right direction," he adds. "If we Buzzelli (left) and Lash to cochair council JUNE 21,1993 C&EN 7
