UpdateDow, Rohm and Haas talks proceed as US trial nears

06 March 2009 23:22  [Source: ICIS news]

(Adds updated stock prices, background throughout)

HOUSTON (ICIS news)--US major Dow Chemical amended a critical bridge loan as it continued talks on Friday with Rohm and Haas while a trial that was scheduled to begin on Monday loomed over their troubled $18.8bn (€15.8bn) merger.

Under the new terms of the loan, Dow has the option of extending by one year a bridge loan beyond its original maturity date of 14 April 2010, the company said in a regulatory filing.

Dow can extend the maturity of the loan as long as it remains in compliance with the certain covenants and if the principal is reduced to $8bn, the company said.

The amount of the loan was also lowered to $12.5bn from $13.0bn, Dow said.

Dow also said it would issue up to $3.0bn in debt within 90 days of closing the Rohm and Haas deal. The debt issue would be in line with earlier plans made by Dow, the company said.

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

Their trial was scheduled to start on Monday.

Rohm and Haas is not seeking damages. Instead, it wants Dow to close the deal immediately.

Both companies had satisfied the conditions of the agreement, Rohm and Haas said. Dow broke the agreement when it did not close on the merger.

Dow said closing the deal so quickly would threaten the viability of the merged company. Instead, Dow wants more time to secure financing for the deal.

Even then, Dow has made no firm commitment to close the deal. At best, Dow said might know by 30 June if it can go on with the merger.

The merger fell apart after Dow's joint venture collapsed with Petrochemical Industries Co (PIC) of Kuwait. Dow would have received $9bn from the deal.

At the same time, financial markets and the chemical industry both deteriorated, with neither showing no signs of immediately recovering, Dow said.

"Under current conditions and the existing terms of the bridge loan, forced closure and consummation of the merger would threaten the viability of the new enterprise," Dow said.

Dow stock closed at $7.11 on the New York Stock Exchange, up 9.89%. Rohm and Haas stock closed at $63.80, up 18.13%.

($1 = €0.80)

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By: Al Greenwood
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