Dow to reduce debt using cash from US$2.2 bln K-Dow settlement

28-May-13

The Dow Chemical Company announced it plans to deploy part of its recent payment from the Petrochemical Industries Company of Kuwait (PIC) to reduce up to US$2 billion in debt in 2013. In addition, Dow is examining other ways to reduce high-cost instruments from its balance sheet. This is consistent with previous statements regarding Dow’s priorities for use of cash. Taken on the whole, Dow’s current and planned actions are expected to deliver more than US$100 million in annual interest expense savings once complete, and are expected to bring the Company’s net debt to total capital ratio to well below 40%. “This is yet another strong example of the deliberate actions Dow is taking to further enhance our financial flexibility,” said Andrew N. Liveris, Dow’s chairman and chief executive officer. “We have been clear and consistent with our prioritized uses of cash, and our recent arbitration award from PIC enables us to take additional aggressive steps to substantially reduce our debt and therefore our interest expenses – positioning Dow well to further increase our earnings, and thus paving the way for future shareholder remuneration. These actions will effectively restore our net debt to capital ratios to pre-2008-crisis levels, as we continue to review additional means to reduce our financing costs. Importantly, Dow has maintained full ownership of its industry-leading plastics franchise, which has delivered exceptional returns and is poised for even further margin expansion due to positive exposure to shale-gas and ethylene value chain dynamics.”