Ashland establishes renewable annual environmental trust
September 08 2021 - 7:00AM
Ashland Global Holdings, Inc. (NYSE: ASH) has established a
renewable annual trust for ongoing and future environmental
remediation and related litigation. The initiative follows
Ashland’s announcement in February to align its operations with the
ambitious aim of the Paris Climate Accord to limit global
temperature rise to 1.5°C above preindustrial levels. At that time,
Ashland also became a signatory to the United Nations Global
Compact and is making the UN principles part of the company’s
business strategy, culture and day-to-day operations.
“Our commitment to this environmental
remediation investment trust is a significant and tangible step on
our journey to move our environmental, social and governance (ESG)
commitments and initiatives forward,” said Guillermo Novo, chairman
and chief executive officer, Ashland. “Our actions to create
and fund this trust will ensure legacy liabilities are addressed
both today and into the future.”
The trust has been initially funded by
approximately $90 million cash value of corporate-owned life
insurance (COLI) policies. Ashland will also deposit
approximately $35 million of corporate cash into the trust and is
committing future net proceeds from sales of certain remediated
excess real estate into the environmental investment trust. These
real estate assets, held on the balance sheet at little or no
value, can often be sold for significant sums once remediated and
marketed for sale. There are currently several properties in
various stages of a sale process. As the sale of these properties
are finalized, net proceeds will be allocated to the trust. We
expect the majority of these properties to be liquidated within the
next two years.
The combination of the corporate cash, existing
COLI assets and remediated real estate sales is expected to fully
fund ongoing cash requirements associated with Ashland’s
environmental remediation efforts, which currently approximates $35
million per year. Over time, Ashland’s commitment of an estimated
$300 million of assets to the environmental investment trust, plus
expected returns on those assets, are expected to fully fund the
$205 million environmental reserve at June 30, 2021 as well as any
future remediation and related litigation at what Ashland estimates
to be the upper end of the reasonably possible range of future
costs.
“Our novel environmental remediation investment
trust will enable us to leverage the underlying value of
these properties as they’re remediated and sold to address
legacy environmental liabilities and will also allow our financial
performance to reflect our new profile,” said Kevin Willis, senior
vice president and chief financial officer, Ashland.
The assets included in the environmental
remediation investment trust will be classified as restricted
long-term assets on Ashland’s balance sheet. The unrealized gains
or losses on securities in the environmental trust, along with
changes in legacy environmental remediation and related
environmental litigation reserves, will be identified as key items
for income statement presentation purposes.
While there is no change to Ashland’s historical
financial statements because of these changes, presenting legacy
environmental and related litigation costs as a key item in
historical periods would have increased Ashland’s adjusted EBITDA
by approximately $11 million in fiscal year 2019 and $10 million in
fiscal year 2020. Ashland expects to reclassify these amounts to
key items for these prior periods to conform to the current
prospective presentation in future financial filings.
“We are committed to making the UN Global
Compact and its principles part of the company’s ongoing business
strategy, culture and day-to-day operations,” continued Novo. “As a
global company, we are intensifying our commitment to ESG-related
principles, and the establishment of the environmental investment
trust is an important milestone in that journey.”
About Ashland
Ashland Global Holdings Inc. (NYSE: ASH) is a premier specialty
materials company with a conscious and proactive mindset for
sustainability. The company serves customers in a wide range of
consumer and industrial markets, including adhesives, architectural
coatings, automotive, construction, energy, food and beverage,
nutraceuticals, personal care and pharmaceutical. Approximately
4,200 passionate, tenacious solvers – from renowned scientists and
research chemists to talented engineers and plant operators –
thrive on developing practical, innovative and elegant solutions to
complex problems for customers in more than 100 countries. Visit
www.ashland.com and www.ashland.com/sustainability to learn
more.
Forward-Looking Statements This
news release contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended and
Section 21E of the Securities Exchange Act of 1934, as amended.
Ashland has identified some of these forward-looking statements
with words such as “anticipates,” “believes,” “expects,”
“estimates,” “is likely,” “predicts,” “projects,” “forecasts,”
“objectives,” “may,” “will,” “should,” “plans” and “intends” and
the negative of these words or other comparable terminology.
Ashland may from time to time make forward-looking statements in
its annual reports, quarterly reports and other filings with the
U.S. Securities and Exchange Commission (SEC), news releases and
other written and oral communications. These forward-looking
statements are based on Ashland’s expectations and assumptions, as
of the date such statements are made, regarding Ashland’s future
operating performance, financial condition, and expected effects of
the COVID-19 pandemic on Ashland’s business, as well as the economy
and other future events or circumstances. These statements include
but may not be limited to Ashland’s expectations regarding its
ability to drive sales and earnings growth and realize further cost
reductions. These statements include, but may not be limited to,
statements about the environmental remediation trust, including the
financial commitment to the trust and the trust’s future
performance. . Various risks and uncertainties may cause actual
results to differ materially from those stated, projected or
implied by any forward-looking statements, including Ashland’s
ability to generate sufficient cash to fund the trust, the trust’s
ability to generate sufficient cash to fund Ashland’s environmental
reserve as well as any future remediation and related litigation.
The extent and duration of the COVID-19 pandemic on our business
and operations is uncertain. Factors that will influence the impact
on our business and operations include, without limitation, risks
and uncertainties affecting Ashland that are described in its most
recent Form 10-K (including Item 1A Risk Factors) filed with the
SEC, which is available on Ashland’s website at
http://investor.ashland.com or on the SEC’s website at
http://www.sec.gov. Ashland believes its expectations and
assumptions are reasonable, but there can be no assurance that the
expectations reflected herein will be achieved. Unless legally
required, Ashland undertakes no obligation to update any
forward-looking statements made in this news release whether
because of new information, future events or otherwise. Information
on Ashland’s website is not incorporated into or a part of this
news release.
™ Trademark, Ashland or its subsidiaries,
registered in various countries.
FOR FURTHER INFORMATION:
Investor
Relations:
Media Relations:Seth A.
Mrozek
Carolmarie C. Brown+1 (302)
594-5010
+1 (302)
995-3158samrozek@ashland.com
ccbrown@ashland.com
- Ashland announces environmental trust 20210908 FNL
Ashland (NYSE:ASH)
Historical Stock Chart
From Aug 2024 to Sep 2024
Ashland (NYSE:ASH)
Historical Stock Chart
From Sep 2023 to Sep 2024