Tenneco Files for Spin-Off of Tenneco Packaging - States Intent to Sell Stake in Packaging Corporation of America - Names CEOs of New Companies.

GREENWICH, Conn.--(BUSINESS WIRE)--July 15, 1999--

Tenneco (NYSE: TEN) today said it has filed a Form 10 with the Securities and Exchange Commission for the tax-free spin-off of Tenneco Packaging, which would create the separation of Tenneco Packaging and Tenneco Automotive. It also has filed today a Form S4 for a debt exchange offer expected to be made in connection with the spin-off.

Tenneco said it expects the tax-free spin-off to be completed in the fall, with each holder of Tenneco stock receiving a dividend of one share of Packaging common stock for each share of Tenneco common stock held.

In the filings, Tenneco also noted the pending appointments of Tenneco Automotive President Mark P. Frissora and Tenneco Packaging President Richard L. Wambold as chief executive officers of the automotive and packaging company, respectively, effective upon the spin-off of packaging and the separation of the two companies. Tenneco Chairman and Chief Executive Officer Dana G. Mead will remain CEO until the separation becomes effective, when he will retire and become non-executive chairman of the board of both companies through March 2000.

Tenneco also said in its filings it plans to sell Tenneco Packaging's remaining interest in Packaging Corporation of America (PCA), with the net proceeds used to retire a portion of Tenneco's consolidated debt that otherwise would be allocated to Tenneco Packaging in the spin-off. Tenneco expects to complete the sale before the spin-off.

Frissora was named president of Tenneco Automotive in April and previously had been senior vice president and general manager of Tenneco Automotive's worldwide original equipment business. With 22 years experience in automotive related businesses, Frissora joined Tenneco in 1996. Under his guidance, Tenneco Automotive's original equipment business has grown 70 percent, from $1.15 billion to nearly $2 billion in 1998.

Wambold became Tenneco Packaging president in June. He had been executive vice president and general manager of Tenneco Packaging. He joined Tenneco in 1977 and Tenneco Packaging in 1994. Since joining Tenneco Packaging, he has helped engineer the growth of Tenneco's specialty packaging business from annual revenues of less than $600 million to nearly $3 billion through internal growth and the integration of targeted acquisitions.

Mead became chairman and CEO of Tenneco in 1994 after joining the company as president and chief operating officer in 1992. Under his leadership, Tenneco has carefully streamlined itself, essentially restructuring all the components of a major 1960's style conglomerate into a focused manufacturing company. While most other similar companies peeled back to their "core" businesses, Tenneco did not have the luxury of a strong profitable core in 1992 when the company's transformation began, but instead had eight essentially very troubled units.

After the sale of its minerals business in 1991 for $700 million, Mead assumed the additional positions of CEO and chairman of J.I. Case. In 1993-94, under his leadership, Case was transformed from a money losing ($1 billion in 1991) and struggling company into a profitable business, which Tenneco spun off in public offerings for over $4 billion in 1994-95.

Another Tenneco company, Albright & Wilson Chemicals, with significant liabilities, was next. With the help of a newly installed management team, A&W was stabilized, enabling Tenneco to conduct an IPO for $820 million (150 pence per share) in 1995. ISPG Plc acquired the company for 162 pence per share in 1999.

Turning around Newport News Shipbuilding, Tenneco was able to re-enter submarine construction, restart commercial shipbuilding after a 20-year hiatus, and expand carrier construction and repair. In 1996, Newport News was spun out to shareowners with an initial market value of $1.2 billion.

Tenneco Energy, the company's original business, in 1996 was merged with El Paso Energy, in a $4 billion transaction after Tenneco's energy business settled huge take-or-pay contract liabilities against the company and expanded it into a highly profitable international business.

Most recently, Tenneco contributed its containerboard business to PCA, a new joint venture with an affiliate of Madison Dearborn Partners. Tenneco received $2 billion while retaining a 45 percent equity interest in the venture.

In all under Mead's leadership, Tenneco has redeployed more than $15 billion. The combined proceeds were used to pay down some $8 billion in debt, deliver $1.5 billion in subsidiary shares to shareowners, repurchase $1 billion in stock, make $1.5 billion in capital investments, and also significantly, to invest $3 billion in acquisitions to build two world-class companies - Tenneco Automotive and Tenneco Packaging.

Major acquisitions to build Tenneco Packaging included Mobil Plastics, with its Hefty(R) brand, and Amoco Foam, and to build Tenneco Automotive, Gillet and Clevite.

The filings today are expected to result in the split of those final two Tenneco businesses, and indicate that the combined annual dividends of the two new companies will be less than Tenneco's current annual dividend.

Mead is chairman of the Business Roundtable, head of the U.S. side of the French American Business Council, former chairman of the National Association of Manufacturers, and former head of the U.S. side of the Transatlantic Business Dialogue.

Tenneco is a $6 billion manufacturing company with 38,000 employees worldwide. With 1998 revenue of $3.2 billion, Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroe(R) and Walker(R) global brand names. Among its products are Sensa-Trac(R) shocks and struts, Rancho(R) shock absorbers, Walker(R) Quiet-Flow(TM) mufflers and DynoMax(TM) performance exhaust products, and Monroe(R) Clevite(TM) vibration control components. Tenneco Packaging, with 1998 revenue of $2.8 billion, is among the world's leading and most diversified packaging companies. Among its products are Hefty(R) trash bags, Hefty OneZip(R) and Baggies(R) food storage bags, E-Z Foil(R) single-use aluminum cookware and Hexacomb paper honeycomb products.