US Dow may restore dividend in next two years - Liveris

04 August 2010 21:50  [Source: ICIS news]

Dow CEO Andrew LiverisHOUSTON (ICIS)--US major Dow Chemical may restore its dividend after cutting it by 64% more than a year ago as the company has shored up its balance sheet and prospered from the economic recovery, chief executive Andrew Liveris said.

"Our balance sheet is intact, and the economic growth that we are now starting to see is intact," Liveris said during an earnings conference call.

Dow said on Wednesday that any changes to its dividend would be a board-level decision. "When the board decides the timing is right, it will take the necessary steps," Dow said in a statement.

The dividend had already been discussed with the board, and it could be restored within two years, Liveris said on the call.

Dow lowered its dividend to 15 cents/share from 42 cents/share on 12 February 2009.

Back then, the company was facing a cash shortfall. Dow had agreed to buy Rohm and Haas for $78/share, a total of roughly $19bn (€14bn).

Dow had planned to fund part of the acquisition with the proceeds from another deal, a proposed joint venture with Petrochemical Industries Co (PIC) of Kuwait.

Dow would have received $9bn from the resulting K-Dow venture. That deal fell apart.

Aggravating the K-Dow collapse was an industry-wide crash in demand.

At the same time, financial markets froze, the result of the credit crisis.

Dow feared it would lose its investment-grade rating, which would increase its borrowing costs.

Dow ultimately closed on the Rohm and Haas deal. Since then, credit markets and demand had started to recover.

Dow had also made billions of dollars worth of divestments - with the $1.63bn sale of Styron being the most recent among the biggest deals.

The Dow board has discussed the dividend, Liveris said during the conference call.

"We are clearly, clearly very mindful at the board," he said. "This is a board decision that we are not where we need to be long term."

Regarding an analyst's question about restoring the dividend, Liveris said: "And I believe the power of the portfolio as you look at the next year or two will enable your question to be answered in the affirmative.

"I can't promise that, but that's certainly something that is top of mind for the reasons you raised," Liveris said.

($1 = €0.76)

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By: Al Greenwood
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