Consumables
Dow Announces Plans to Retire Debt in the First Quarter
Thursday 24. February 2011 - The Dow Chemical Company (NYSE: DOW) announced today that it is launching a cash tender offer for approximately $750 million aggregate principal amount of notes listed by Dow and its subsidiaries.
“Our actions this quarter will enable us to deliver a structural reduction in interest expense, and the result is accretive to shareholders”
This announcement follows a series of debt reduction activities the Company plans to execute in the first quarter, including the pay-off of $800 million of matured debt and more than $150 million of InterNotes. Taken together, these actions will enable Dow to reduce its overall debt by more than $1.5 billion.
“Our actions this quarter will enable us to deliver a structural reduction in interest expense, and the result is accretive to shareholders,” said Bill Weideman, Dows executive vice president and chief financial officer. “Its also important to note that, after retiring this debt, we will still have a cash balance that is higher than our historical average, which illustrates our strengthened capital structure and enhanced financial flexibility.”
Todays cash tender offer addresses high-coupon debt, some of which was issued during the global economic crisis of 2009.
Details regarding the cash tender offer:
The Dow Chemical Company today has commenced cash tender offers for up to (i) $450 million aggregate principal amount of the notes listed under “Pool 1 Notes” in the table below issued by Dow and its subsidiary Union Carbide Corporation and (ii) $300 million aggregate principal amount of the notes listed under “Pool 2 Notes” in the table below issued by Dow and its subsidiary Rohm and Haas Company.
Following consummation of the tender offers, the notes that are accepted will be purchased, retired and cancelled by the relevant issuer. The price paid in the offers will be determined based on the yield to maturity of a U.S. Treasury Reference Security plus a spread determined using a modified “Dutch Auction” method, all as more fully described in the Offer to Purchase and related documents. Notes validly tendered and not withdrawn on or before 5:00 p.m., New York City time, on March 8, 2011 (the “early participation date”) will receive total consideration including an early participation amount equal to $30.00 per $1,000 principal amount of notes. Notes tendered after the early participation date but prior to the expiration date, which is 12:00 midnight, New York City time, on March 22, 2011, will not receive the early participation amount. Tendered notes may be withdrawn at any time on or prior to 5:00 p.m., New York City time, on March 8, 2011, unless extended by Dow. Notes tendered after the withdrawal date may not be withdrawn. The tender offers are subject to proration if oversubscribed.
The notes subject to purchase and other information relating to the tender offers are listed in the table below:
Acceptable Bid Spread Range (bps)
Title of Security/Issuer CUSIP Number Principal Amount Outstanding (MM) Early Participation Amount(1) Minimum Spread Maximum/Base Spread U.S. Treasury Reference Security Bloomberg Reference Page
Pool 1 Notes
8.550% Notes due 2019/Dow 260543BX0 $3,250.0 $30.00 90 120 3.625% due February 15, 2021 PX1
7.750% Debentures due 2096/Union Carbide 905581AS3 $200.0 $30.00 260 290 4.250% due November 15, 2040 PX1
Pool 2 Notes
9.400% Notes due 2039/Dow 260543BY8 $1,000.0 $30.00 110 140 4.250% due November 15, 2040 PX1
7.850% Debentures due 2029/Rohm and Haas 775371AU1 $881.8 $30.00 140 170 4.250% due November 15, 2040 PX1
(1) Per $1,000 principal amount of notes accepted for purchase.
Dow has retained Goldman, Sachs & Co. and J.P. Morgan Securities LLC, as Lead Dealer Managers, and ING Financial Markets LLC, RBC Capital Markets, LLC and Scotia Capital (USA) Inc., as co-Dealer Managers, for the tender offers. Global Bondholder Services Corporation is the Information Agent and Depositary for the tender offers. For additional information regarding the terms of the tender offers, please contact: Goldman, Sachs & Co. at (800) 828-3182 (toll-free) or (212)-902-5128 (collect) or J.P. Morgan Securities LLC at (866) 834-4666 (toll-free) or (212) 834-2494 (collect). Requests for documents and questions regarding the tendering of notes may be directed to Global Bondholder Services Corporation at (212) 430-3774 (for banks and brokers only) or (866) 389-1500 (for all others toll-free).
This press release does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, any security. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. The offers are being made solely pursuant to the Offer to Purchase and related documents made available to holders of the notes.