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To: scion who wrote (19076)	1/7/2009 9:58:55 AM
From: scion	Respond to of 19428

Dow's Liveris Says Recovery Is Delayed, Not Derailed JANUARY 7, 2009 By ANA CAMPOY and RUSSELL GOLD online.wsj.com Facing his biggest test at one of the world's largest chemical companies, Andrew Liveris, chief executive of Dow Chemical Co., assured investors Tuesday that the collapse of a joint venture with a Kuwaiti company won't derail the company's ambitious transformation. Mr. Liveris, while offering no concrete details, laid out in an interview and financial filings an array of solutions he is pursuing to recover from the setback and strengthen Dow's financial position. They include pursuing legal remedies against its former partner for abandoning the $17.4 billion deal, selling assets to raise cash and seeking new partners for a joint venture. (Interview excerpts) But questions about Dow's planned $15.3 billion acquisition of specialty chemicals maker Rohm & Haas Co. continued to dog Mr. Liveris, with analysts suggesting the purchase could overburden Dow as the global economy has sent demand for its plastics plunging. "The balance sheet will definitely be very stretched" if Dow goes ahead with the deal, said HSBC analyst Hassan Ahmed. Another major chemical manufacturer, privately held LyondellBasell Industries, said two of its units filed for bankruptcy protection Tuesday after sinking revenue left it unable to manage a heavy debt load. Dutch chemicals maker Basell International Holdings in 2007 paid a premium of about 20% to buy Houston-based Lyondell Chemical. Mr. Liveris on Tuesday declined to elaborate on the status of Dow's Rohm & Haas acquisition or say whether the company is set to close the deal early this year as planned. He reassured investors that maintaining the company's investment-grade credit rating is a priority, and that Dow will continue to pay its dividend as it has done for 96 years without any reduction. Dow executives have previously said the Rohm & Haas acquisition is not contingent on the $9 billion in cash it would have obtained by closing the Kuwait joint venture. Dow has secured a $13 billion short-term loan from a group of banks and $4 billion in other financing that it says will help fund the acquisition. Many of those bankers said Tuesday they remain committed to providing the money for the deal, which must close by the end of this week to avoid incurring extra costs. "One should assume that Rohm & Haas is in our future," Mr. Liveris said in an interview. "Now having said that, we've just had a material event and we're in the middle of a regulatory situation, so...I don't want to make any announcement or add to any speculation on Rohm & Haas." A Rohm & Haas spokesman said Tuesday that the company continues to work toward closing the deal in early 2009. Dow's agreement with Rohm & Haas doesn't allow it to back out by paying a cancellation penalty. Rather, Dow will have to pay a steep price, raising its $78-a-share offer by 1.7 cents a day, if it delays past January 10. Any delay would increase the cost of the acquisition by about $3 million a day, according to calculations based on a company filing. Kuwait's 11th-hour decision to pull out of the joint venture dealt a heavy blow to Mr. Liveris's strategic plans for Dow. Since taking over as CEO in 2004, Mr. Liveris, who spent most of his 32-year Dow career in Asia, had concentrated on transforming the 112-year-old Dow from a manufacturer of low-profit bulk chemicals to a cutting edge growth company. His blueprint relied on paring the company's low-margin commodity-chemicals business by taking partners in regions where the oil and natural gas that fed Dow's petrochemical plants is cheaper, while freeing up cash to invest in more profitable specialty chemicals. Mr. Liveris had conceived the Kuwait joint venture in late 2007 as the repository for much of the company's highly cyclical commodity chemicals. The deal also would have provided Dow with cash to help fund the cornerstone of Mr. Liveris's transformation plan: the purchase of Rohm & Haas. On Tuesday, he said the company is currently in talks with two interested parties that could replace its original partner, Petrochemical Industries Co., in the first half of the year. Dow has not identified those potential partners. Dow also will accelerate thousands of job cuts and plant closures, announced in December, and further trim its capital spending. The company plans to put several commodity-chemical assets on the block that could yield several billions of dollars, according to Mr. Liveris. Dow's plan is not without risks given the dismal state of business in the chemical sector and tight credit conditions, analysts say. Oil prices have also plunged, drying up income for oil-rich nations that could replace Kuwait as a partner. Fighting for legal compensation could complicate Dow's current partnerships and tarnish its reputation in the Middle East. Dow also faces a huge bill from another major joint venture with a Middle East partner: about $10 billion from its share of a new petrochemical complex in Saudi Arabia. And despite Mr. Liveris's assurances, some analysts are worried Dow might have to reduce its dividend if it buys Rohm & Haas acquisition and is unable to quickly replace the Kuwaiti deal. "It's a risky strategy," said Michael Judd, analyst with Greenwich Consultants LLC. Dow's investors are already paying the price. Since the beginning of October, Dow's stock has fallen more than 50% to a low of $15.05 Monday. It climbed 6.6%, to $16.05, in 4 p.m. New York Stock Exchange trading after Mr. Liveris's announcement. Dow's dire situation is all the more striking because Mr. Liveris had foreseen the nation's deteriorating economy. In June, he predicted tough times would last through 2009. Soon afterwards, he announced a new round of plant closings and job cuts to prepare for leaner times. "He gambled the entire company on this deal and that is foolhardy," said Philip Leighton, director of petrochemicals for London-based Jacobs Consultancy. —Heidi Moore contributed to this article. Write to Ana Campoy at ana.campoy@dowjones.com and Russell Gold at russell.gold@wsj.com online.wsj.com

To: scion who wrote (19076)	1/29/2009 10:23:40 AM
From: scion	Respond to of 19428

Woes Multiply at Dow Chemical JANUARY 29, 2009 By ANA CAMPOY and LESLIE EATON online.wsj.com Dow Chemical Co.'s troubles multiplied Wednesday, as a rating agency renewed warnings it might lower the company's debt rating to junk status and the Kuwaiti parliament launched a bribery probe into a failed Dow joint venture. Riding high only a few months ago, Dow now risks financial ruin, Chief Executive Andrew Liveris says, if a court forces it to move ahead immediately on the $15.3 billion acquisition of Rohm & Haas Co. that it struck last year. Mr. Liveris argues he needs more time to arrange stable financing before going through with the purchase. Any settlement with Rohm & Haas is almost certain to require Dow to pay billions of dollars that it can ill afford, analysts say. Its business is struggling amid weak demand for its chemicals. Even the company's treasured dividend is suddenly at risk, Mr. Liveris conceded this week, after insisting as recently as December that it would not be cut "on my watch." Shares of the Midland, Mich., company rose 25 cents, to $13.44, in 4 p.m. trading Wednesday on the New York Stock Exchange. Its dividend yield has soared above 12%, compared with a yield of about 4% last May when shares were more than $42. "They've been very unlucky," says Hassan Ahmed, analyst with HSBC. "They're caught between a rock and a hard place." Just last year Mr. Liveris was promoting the Kuwait and Rohm & Haas deals as key to transforming the 112-year-old company from a producer of low-margin commodity chemicals and plastics into a high-tech star. Many of Dow's industrial plants were to be sold to a joint venture with state-owned Kuwait Petroleum Corp. Money from that sale would be used to help finance a merger with Rohm & Haas, a Philadelphia manufacturer of specialty chemicals and electronic components. Kuwait's parliament forced the state oil company to back out of the joint venture just before New Year's Day. Stunned by the reversal, Mr. Liveris said he might try to sue for breach of contract. Kuwait's parliament fired back on Monday, the state-run news agency said. A committee was set up to probe "highly-controversial issues, notably" the Dow deal and whether it involved "irregularities, fraud, or bribe-taking." Kuwaiti officials couldn't be reached for comment. Dow declined to comment on the report, and didn't respond to debt-rating agency Moody's Corp., which reiterated Wednesday the company's credit rating is at risk because of the Rohm & Haas deal. Dow had been counting on $9 billion from its Kuwait venture to help pay for the merger. The iron-clad deal with Rohm & Haas does not allow it to back out, for example, if it lost its financing. Dow had arranged a one-year, $13 billion bridge loan from a consortium of banks, but the credit crisis and its own deteriorating financial picture made using that loan unpalatable and refinancing it very expensive, analysts say. If Dow uses that loan to complete the purchase of Rohm & Haas, it must come up with "a very detailed refinancing plan that entails very little execution risk in order to maintain an investment-grade rating," Moody's said on Wednesday. Dow also faces a credit-rating downgrade if it is forced to pay billions to walk away from the deal, Moody's analyst John Rogers said. Mr. Liveris doesn't have much time to figure out a solution to the company's problems. A trial is set to begin March 9 on Rohm & Haas's lawsuit asking a judge to force Dow to live up to its merger agreement. Write to Ana Campoy at ana.campoy@dowjones.com and Leslie Eaton at leslie.eaton@wsj.com online.wsj.com