24 May 2013 16:35 [Source: ICIS news]
HOUSTON (ICIS)--Dow Chemical plans to use part of its K-Dow award to reduce up to $2bn (€1.5bn) in debt this year, the US-based major said on Friday.
Dow will also look for other ways to reduce high-cost debt from its balance sheet, the company said.
Altogether, Dow expects to save more than $100m/year in interest expenses as a result of paying down the debt, the company said. Dow's net debt/total capital should fall below 40%.
Earlier this month, Dow said it received a $2.2bn cash payment from Petrochemical Industries Co of Kuwait (PIC), marking the final resolution of a dispute which arose after PIC in 2008 pulled out of the proposed K-Dow joint venture with Dow Chemical.
Once PIC pulled it, it and Dow had agreed to resolve their contractual disputes through the International Chamber of Commerce's (ICC) International Court of Arbitration.
In March, the International Court of Arbitration of the ICC released the final award amount, consisting of the partial award of $2.16bn announced in May 2012, plus $318m in interest and costs.
Dow has consistently said it would use the reward to pay down debt.
"These actions will effectively restore our net debt to capital ratios to pre-2008-crisis levels, as we continue to review additional means to reduce our financing costs,” according to a statement by Andrew Liveris, Dow CEO.
By paying down debt and reducing interest expenses, Dow is positioned to increase earnings and reward shareholders, he said.
In addition, by maintaining full control of its PE business, Dow was able to benefit from the advent of shale gas, which gave US producers a large feedstock advantage against much of the world, Liveris said.
($1 = €0.77)
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