S&P may lower Dow/Rohm and Haas ratings on merger, lawsuit

07 February 2009 00:23  [Source: ICIS news]

HOUSTON (ICIS news)--Standard & Poor's Ratings Services (S&P) may lower its corporate and debt ratings for Dow Chemical and Rohm and Haas, due to concerns over their troubled $18.8bn (€14.7bn) merger, the ratings firm said on Friday.

Rohm and Haas sued Dow in Delaware Chancery Court, after the company missed a 27 January deadline to close the merger.

The lawsuit could result in a settlement or a judgment against Dow, large enough to result in a lower rating, S&P said.

Dow's ratings could also drop if it completes the merger without find a better way to finance the deal, S&P said.

Right now, Dow is relying on a $13bn bridge loan that is set to mature on 14 April 2010.

If Dow completes the merger without firm commitments to extend the loan, S&P could lower Dow's ratings to speculative grade, the firm said.

Even if Dow secures the commitment, S&P would still review the terms, as they could be restrictive enough to affect Dow's ratings, the firm said.

Dow could maintain its ratings if it abandons the merger, S&P said. However, Dow would have to leave the deal without paying a massive penalty.

The ratings for Rohm and Haas are under review because they are tied to the outcome of the merger, S&P said. If the merger closes, then the Rohm and Haas ratings would be aligned with those of Dow.

 ($1 = €0.78)

For more on Dow or Rohm and Haas visit ICIS company intelligence
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By: Al Greenwood
+1 713 525 2645



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