Ashland Inc. Rtgs Afrmd by S&P;Outlook Revised to Pos.

NEW YORK--(BUSINESS WIRE)--Nov. 13, 1997--Standard & Poor's today affirmed its triple-'B' corporate credit and senior debt ratings, and 'A-2' commercial paper rating on Ashland Inc.

The ratings outlook was revised to positive from stable.

Ratings on Ashland Inc.'s debt reflect its diversified portfolio of energy and chemical businesses, and moderate capital structure. Overall financial performance remains influenced by refining operations, where margins have remained thin. However, given growth of the company's chemical division and other diversified businesses, a measure of stability is being added to Ashland's financial results. Ratings take into account the proposed joint venture with USX Corp.'s Marathon Oil Co. (triple-'B'-minus/Stable/-) -- which is expected to be completed around year-end 1997 -- under which both companies will combine their refining and marketing businesses, affording the opportunity to realize significant cost savings. Ashland will own 38% of the venture, but through the limited liability legal structure, will have full access to its pro rata share of the entity's cash flows.

Ashland has made progress in cutting costs in refining operations by increasing usage of less expensive sour and heavy oil feedstocks, but these initiatives have not been sufficient to compensate for difficult industry fundamentals, which have been the driving force behind industry consolidation in recent years, including this proposed venture. The joint venture will include Ashland's SuperAmerica retail network, which has been performing well, but not the Valvoline motor oil business.

Chemicals have become an important element of Ashland's earnings stream, given that they are largely noncyclical, and thus counterbalance the volatility of petroleum operations. Coal operations are also taking on a higher profile as a result of the merger of Ashland Coal and Arch Mineral Corp. The merger, effective July 1, 1997, has create the third-largest coal producer in the U.S. The sale of Blazer Energy Corp. in mid-1997, Ashland's exploration and production unit, has enabled debt reduction of about $250 million, but debt-leverage is expected to remain in the range of 40%-45% going forward.

OUTLOOK: POSITIVE

Efforts on the part of management to restructure operations away from highly cyclical refining and marketing operations, and to reduce debt leverage have begun to improve financial performance. Should this trend continue over the next few years, an upgrade could occur. -- CreditWire

CONTACT: Dmitri P Nayduch, New York 212/208-8396

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