$1.5B of debt reduction already announced now in Q1……about that dividend? While I support these moves 100% (deleveraging) I think we are at the stage where investors should be given some more firm dividend guidance. Yes, I know DOW was burned once before making such statements but saying “we are reviewing the dividend for a hike in 2011” is a long way from “I will never cut the dividend”. There is a nice middle of the road here, it does not have to be all or nothing.
The Dow Chemical Company (NYSE: DOW) announced today ago that it is launching a cash tender offer for $750 MM of high coupon debt.
This is the third in a series of debt reduction activities announced in the first quarter of 2011. In addition to today’s cash tender offer, Dow will also pay off $800 MM of matured debt, and more than $150MM of InterNotes (medium-term retail bonds).
Collectively, these actions will enable the Company to reduce its overall debt by >$1.5B.
These actions will be accretive to shareholders in Q2 2011 and will together deliver a structural reduction in Dow’s interest expense (~ $120MM – $130MM in annual pre-tax savings).
Dow remains on track to achieve a net debt to capitalization ratio of below 40% by the end of the 2012.