31 January 2013 18:10 [Source: ICIS news]
HOUSTON (ICIS)--Dow Chemical expects to receive the final award in its K-Dow arbitration case in February, and the amount could total nearly $2.5bn (€1.9bn), the company's CEO said on Thursday.
Liveris made his comments during the company's Q4 earnings conference call.
Once cash and interest are added to the initial $2.16bn award, Dow expects the total to approach $2.5bn, Liveris said.
Dow expects to receive the final award in February, he said. Until then, Liveris expects that interest will accrue until the company receives the payment.
"This cash injection will go directly to our balance sheet," Liveris said.
The company plans to use the money to pay down debt, to reward shareholders and to grow the company organically, Liveris said.
The failed K-Dow joint venture dates to December 2007, when Dow and PIC announced the agreement to create the company.
To form the joint venture, PIC would have paid $9.5bn for a 50% share in five of Dow's global businesses, worth approximately $19bn.
The agreement would have seen substantially all of the Dow-owned, former Union Carbide polyethylene (PE) business and some of Dow’s cracker capacity put into the new company.
Dow intended to use the proceeds from the K-Dow deal to help fund its $18.8bn acquisition of Rohm and Haas.
However, Kuwait ruled in December 2008, at the height of the global financial crisis, that PIC should withdraw from the planned olefins and PE joint venture.
Following the collapse of the K-Dow deal, Dow missed a deadline to close on the Rohm and Haas acquisition, which later resulted in a lawsuit.
Ultimately, Dow resolved the lawsuit with Rohm and Haas, and the merger closed on 1 April 2009. By that time, however, Dow had lowered its dividend to 15 cents from 42 cents.
Meanwhile, Dow and PIC had agreed to resolve their contractual disputes through the International Chamber of Commerce's (ICC) International Court of Arbitration.
Dow has said that its partnership with Kuwait remains strong and will continue to benefit both parties. It includes the Kuwait-based ethylene, PE and ethylene glycol (EG) joint venture Equate and the EG joint venture MEGlobal.
PIC is a partner in both of these ventures.
($1 = €0.74)
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