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 are not successful [in confronting envi­ronmental issues], we simply are not going to exist."

By bringing together leaders from so many sectors, Lash says, "we can change the way national environmental policy is made—from confrontation to partner­ship—from gridlock to progress."

The goal of the council is to develop a national strategy for sustainable de­velopment that can be implemented by both public and private sectors. The council will formulate part of the U.S. plan that will be submitted to the Unit­ed Nations Commission on Sustainable Development. The commission is the international body created at the Earth Summit to oversee implementation of Agenda 21—the comprehensive inter­national policy declaration that nations agreed to at the summit.

The council will divide into commit-

On June 14, the anniversary of the Earth Summit in Brazil, President Bill Clinton created a new White House ad­visory group called the President's Council on Sustainable Development. The council will strive to create policies that encourage economic growth, job creation, and, at the same time, envi­ronmental protection.

In announcing the council, President Clinton said, "Every nation faces a challenge to identify and implement policies that will meet the needs of the present without compromising the fu­ture. America will meet that challenge with the help of this council and the ideas and experience its members bring to this important task."

David T. Buzzelli, vice president and corporate director of environment, health and safety, and public affairs for Dow Chemical, and Jonathan Lash, president 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

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