Byline: Michael McNamara

NEW YORK--Edgar S. Woolard Jr., chairman and chief executive officer of DuPont, said Friday the company has not decided which specific assets it will sell to fund its buyback of nearly all of the 24 percent stake owned by The Seagram Co. He made it clear, however, that DuPont's fibers business was an unlikely option.
"The fibers business is generally strong and there isn't [any] reason to believe anything we are doing will have anything to do with the fibers business," he said. "Fibers is an area where we have great strengths in product and management."
Still, Woolard did not totally rule out a sale, saying, "We will be looking at all business units."
As reported, DuPont on Thursday redeemed 156 million of its own common shares from Seagram in a transaction valued at about $8.8 billion. Woolard, in a telephone press briefing, said the company will make its decision on which assets it will sell to finance the deal "within the next several weeks."
DuPont said permanent funding for the transaction will include $5 billion from cash flow from operations and selective sales of assets; about $1 billion from a Flexitrust program that uses DuPont shares to finance existing employee benefit programs and about $2.5 billion from offerings of equity securities.
"We will be evaluating the competitive positions on all businesses," Woolard said. "We have a very clear game plan. Every single portion of the company has financial hurdles."
DuPont's fibers business is coming off its best year since 1989, bolstered by strong performances in its three key apparel fibers--Dacron polyester, nylon and Lycra spandex. Sales of the fibers business hit a record $6.8 billion in 1994.Fiber earnings before special items advanced to $676 million from $425 million.
Woolard said that among the criteria DuPont will use to evaluate its assets are earnings, maintaining a substantial position in technology or marketing expertise, strong customer relationships and long-run and short-run business prospects.
As reported, many observers believe DuPont will keep its fibers business as it searches for assets to sell.
"I don't think they're going to touch an area such as fibers, which has been a great performer, and an area that they've invested in," said one fiber executive.
DuPont's investments in its fibers business over the past 12 months include:
The addition of 100 million pounds of Dacron polyester filament capacity.
Continuation of global expansion through several joint ventures.
Updating product lines while reducing production costs in Lycra.
"We are always evaluating whether or not businesses can meet financial criteria," Woolard said. On the buyback itself, Woolard said: "We're delighted to have achieved a transaction that provides a significant benefit to all our shareholders."
DuPont was able to redeem the shares for about $53 per share, hitting significantly below the current market price. On Thursday, DuPont stock traded on the New York Stock Exchange closed at 64 3/4, and on Friday the closing was 62 1/2.
The company has stated it believes that as a result of the buyback, its earnings per share will increase about 10 percent annually over the next one to two years. The firm also said it believes its shares have been undervalued in the marketplace so that redeeming Seagram's shares was the best use of DuPont's financial resources.
In another development, however, Standard & Poor's lowered its ratings Friday on DuPont's senior debt and preferred stock to double A minus from double A, citing increased risk following the share buyback from Seagram,, and maintained its "negative" outlook on the ratings. However, S&P noted, the downgrade reflects S&P's expectation that DuPont will be able to "substantially restore its credit profile within the next few years."
"DuPont should be aided in its debt-reduction efforts by continued improvements in cash flow generation, given its success with efficiency initiatives, the favorable intermediate-term business fundamentals in its key markets, and more moderate capital spending requirements," S&P said. "Still, financial risk will remain heightened until management completes its somewhat ambitious plan."
S&P also noted: "Failure to realize meaningful debt reduction in the near term could result in another ratings downgrade."

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