TEXT-S&P release on Ashland Inc, Hercules Inc

(The following statement was released by the rating agency)

July 11 - Standard & Poor's Ratings Services placed its ratings on Ashland
Inc. (ASH.N), including the 'BB+' corporate credit rating, on CreditWatch with
negative implications following the announcement that Ashland will acquire
Hercules Inc. HPC.N in a transaction valued at $3.3 billion excluding
transaction-related costs.

At the same time, we placed our 'BB+' corporate credit rating on Hercules
and our 'BB-' rating on its $350 million 6.5% junior subordinated deferrable
interest debenture due June 20, 2029 (remaining balance $215 million) on
CreditWatch with negative implications.

We affirmed our ratings on Hercules' bank credit facility and $250
million 6.75% senior subordinated notes due Oct. 15, 2029. Because these
instruments contain change of control provisions, we believe they would be
repaid upon closing of the acquisition.

"If the transaction closes as currently structured, we expect to lower
Ashland's corporate credit rating to 'BB' and assign a negative outlook," said
Standard & Poor's credit analyst Cynthia Werneth.

From a business risk perspective, the Hercules transaction would be a
strong positive. It would add substantial specialty chemical assets with
investment-grade business characteristics, creating a company with more than
$10 billion in annual revenues. The acquisition should result in more
favorable growth prospects and a more stable and profitable chemicals company,
with reduced reliance on the lower-margin distribution and Valvoline products.

Although the transaction as currently contemplated will be primarily
debt-financed, it will include about $500 million of stock at Ashland's
pre-announcement share price. In addition, Ashland currently has very little
book debt, and the company plans to use its substantial cash balance to
finance the Hercules acquisition. As a result, we expect Ashland's total
adjusted debt pro forma for the transaction to be about $3 billion. We would
adjust debt to include about $360 million of after-tax pension and other
postretirement obligations, $210 million of estimated, tax-effected asbestos
liabilities, and $210 million of capitalized operating leases at the combined
company. Pro forma funds from operations (FFO) to adjusted total debt will be
in the upper teens percentage area. Following this acquisition, we would
expect Ashland to use the majority of discretionary cash flow to reduce debt,
so that the FFO to debt ratio strengthens to the 20%-25% range we deem
appropriate at the 'BB' rating.

We will update this CreditWatch for any changes to the transaction
structure or if details regarding the prospective capital structure are
disclosed. We anticipate resolving the CreditWatch upon closing of the
transaction, which is expected to occur by the end of calendar 2008, subject
to Hercules shareholder and regulatory approval. Ashland has financing
commitments for the transaction.

Complete ratings information is available to subscribers of
RatingsDirect, the real-time Web-based source for Standard & Poor's credit
ratings, research, and risk analysis, at www.ratingsdirect.com. All ratings
affected by this rating action can be found on Standard & Poor's public Web
site at www.standardandpoors.com; select your preferred country or region,
then Ratings in the left navigation bar, followed by Credit Ratings Search.
(New York Ratings Team)