Salt sale brings US Dow divestment target to $2.1bn

02 April 2009 21:00  [Source: ICIS news]

Dow still has assets for saleHOUSTON (ICIS news)--After selling its salt business, US major Dow Chemical still has about $2.1bn (€1.6bn) divestments to make by year end, under a debt-reduction plan it introduced earlier this year, according to company statements and an announcement made on Thursday.

Dow set a goal of divesting $3.8bn in assets as part of a programme to dig itself partly out of debt.

sale of Morton Salt  lowers the divestment amount by $1.7bn.

Dow has outlined possible sales that could help it retire the bridge loan. It has a list of six assets it could sell.

Dow has started preliminary talks on the sale of some equity stakes in olefins and derivatives ventures in southeast Asia. Dow has not identified the assets involved, but it does have joint ventures in Malaysia (Optimal) and Thailand (with Siam Cement).

In addition, Dow is trying to find a buyer for its 45% stake in TRN, a Dutch petroleum refining partnership with energy giant Total, the company said.

Dow introduced the $12.6bn debt reduction programme in March, shortly after revising the terms of its acquisition of
Rohm and Haas, a deal valued at roughly $19bn.

To help finance the deal, Dow drew down roughly $10bn on a $12.5bn bridge loan. Under the debt-reduction programme, Dow identified ways to pay off the bridge loan.

So far, the company plans to raise $3bn from Rohm and Haas shareholders. Another $550m would come from an equity offer to the Rohm and Haas employment stock ownership plan (ESOP).

Dow's massive dividend reduction could raise another $900m, the company said. Another $4.3bn would come from a debt issuance.

"The quickness of the sale and price are a positive for Dow in our view, but we remain on the sidelines," according to a research note by PJ Juvekar, an analyst with Citibank.

Dow is operating during a commodity downturn, he said. The coatings and electronics businesses of Rohm and Haas could experience weakness, he said.

Already, Standard & Poor's Rating Service (S&P) has lowered Dow's rating to BBB-, just above speculative grade. Dow's rating could slip into junk status if it reports weak first-quarter results or if it fails to sufficiently reduce its debt.

($1 = €0.76)

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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