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Last updated on April 18, 2014 at 17:24 EDT

Dow Chemical Confirms Commitment to Transformational Corporate Strategy

January 6, 2009

MIDLAND, Mich., Jan. 6 /PRNewswire-FirstCall/ — The Dow Chemical Company
(NYSE: DOW) today announced a wide range of legal, operational and financial
actions that will keep the Company on track to fulfill the transformational
corporate strategy Dow has pursued since 2005.

Dow’s strategy will continue to involve aggressive steps to establish Dow
as a high-performance, earnings growth company organized around a strong
portfolio of joint ventures and market-facing performance business divisions.
Central to Dow’s strategy is its commitment to retain a strong investment
grade rating and to maximize shareholder return.

According to Dow Chairman and CEO Andrew Liveris, the recent decision by
Dow’s partners in Kuwait to abandon the terms of its Joint Venture Formation
Agreement (JVFA) will not deter the Company from pursuing the transformational
strategy that has been Dow’s roadmap for future growth and profitability.

“While the events of the past week have been extremely disappointing and
completely unexpected given where we were in the approval process, Dow is and
will continue to be a strong, globally diverse company with a wide range of
options available to us for delivering on our strategy. It is certainly true
that the actions in Kuwait have accelerated the need for decisive action but
our strategy remains as relevant as ever and will drive the choices we make to
become a company that will thrive in the changing markets of the 21st
century.”

Dow to Pursue Legal and Other Options to Fulfill Rights under Kuwait
Agreement

On December 31, 2008, Dow received official written notice from
Petrochemical Industries Company (PIC) of Kuwait that the closing must be
postponed because the Kuwaiti Supreme Petroleum Council withdrew its earlier
approval of the transaction. As a result, Dow has said it will seek to
enforce its rights under the terms of the various agreements and the JVFA
executed by Dow and PIC since the joint venture partnership was first
announced in December 2007.

“We were shocked by this news, and this was completely unexpected given
the approvals already received and the behavior, actions and words from our
partners. We have over 1,500 documents prepared for closing for what we
believed to be Day 1 of K-Dow Petrochemicals on January 2,” said Liveris.
“Pursuing legal options is not a decision we take lightly, especially because
of the longstanding partnerships we have established in Kuwait over the past
decade, but PIC is in breach of contract, and we must take action to protect
the interests of our company and our shareholders.”

Beyond K-Dow: New Partnerships, New Opportunities

Although Dow is prepared to close K-Dow immediately if PIC does indeed
cure the breach of contract, the Company has already been approached by other
interested parties about joint venturing with Dow for the basic plastics
businesses. As a result, Dow has also announced it will establish a formal
process to secure a joint venture partner to accomplish the goals of its asset
light strategy. The core businesses involved in the K-Dow joint venture
include strong Dow franchise businesses, among them the largest and strongest
producer of polyethylene in the world. Polyethylene is the world’s largest
thermoplastic and for the last several decades has grown well above global
GDP.

“Prior to signing the definitive agreement with our Kuwaiti partners about
the K-Dow joint venture, we had other options and partners to consider,”
Liveris said. “Some of these discussions were active as recently as November,
and we have already been contacted by other interested parties and have begun
discussions. This can be done on an accelerated timeline due to the
considerable groundwork that has already been established in anticipation of
the K-Dow joint venture.”

Dow believes that the identification of an alternative joint venture
partner for Dow’s basic plastics business combined with the acceleration of
planned divestitures and several additional divestments that are consistent
with the Company’s strategy will yield proceeds greater than the funds Dow
expected to receive in connection with the K-Dow joint venture.

Remaining Responsive to a Volatile Global Economic Environment

While the status of the K-Dow joint venture has created an unexpected
hurdle for Dow’s corporate strategy, the Company has a long history of
responding quickly and aggressively to the rapidly changing external events
that are characteristic of the global economy in the 21st century.

Indeed, many of the elements of the transformational strategy Dow has
pursued since 2005 were created in response to the rapidly changing global
environment. For example, extreme fluctuations in hydrocarbon prices in the US
and other parts of the world led to the development of Dow’s “asset light”
strategy which has sought to develop new facilities in parts of the world
where hydrocarbon costs are lower and more consistently predictable.

Earlier in 2008, with petroleum costs at an all-time high, Dow again
responded aggressively with company-wide price increases that reinforced Dow’s
commitment to assuring financial performance despite rapidly changing external
factors.

“In this volatile economic environment, the marketplace will reward
companies committed to becoming leaner, more agile and more responsive to both
challenges and opportunities,” Liveris said. “Dow will be precisely this kind
of company, and we intend to emerge from the current economic climate a more
formidable competitor, better able to meet the considerable opportunities of
this century.”

Commitment to Financial Discipline and Maintaining Strong Investment Grade
Credit Ratings

Since the onset of the global financial crisis in September 2008, Dow has
taken aggressive actions to reduce capital spending, working capital and
operating expenses. With further weakening in the global economy, Dow
announced a restructuring in December which will reduce the Company’s
workforce by approximately 11 percent, close facilities in high-cost locations
and divest several non-strategic businesses. “We undertake actions like these
with a very clear outcome in mind — to preserve our financial flexibility and
improve our financial performance.

We took aggressive action in 2008 and we will accelerate these actions
even faster and more aggressively in 2009,” said Liveris. “The measures will
also allow us to preserve our strong investment grade rating – a commitment we
take very seriously. These actions include an acceleration of expense and
capital reduction programs as well as cash preservation measures that ensure
we retain our options and financial flexibility during these volatile and
uncertain times.”

Commitment to Dow Shareholders

The combination of planned actions on cash flow as well as operating
earnings will allow Dow to continue to pay our regular, quarterly cash
dividend, which the Company has done for 389 consecutive quarters without
reduction or interruption, since 1912.

About Dow

With annual sales of $54 billion and 46,000 employees worldwide, Dow is a
diversified chemical company that combines the power of science and technology
with the “Human Element” to constantly improve what is essential to human
progress. The Company delivers a broad range of products and services to
customers in around 160 countries, connecting chemistry and innovation with
the principles of sustainability to help provide everything from fresh water,
food and pharmaceuticals to paints, packaging and personal care products.
References to “Dow” or the “Company” mean The Dow Chemical Company and its
consolidated subsidiaries unless otherwise expressly noted.

Note: The forward-looking statements contained in this document involve
risks and uncertainties that may affect the Company’s operations, markets,
products, services, prices and other factors as discussed in filings with the
Securities and Exchange Commission. These risks and uncertainties include, but
are not limited to, economic, competitive, legal, governmental and
technological factors. Accordingly, there is no assurance that the Company’s
expectations will be realized. The Company assumes no obligation to provide
revisions to any forward-looking statements should circumstances change,
except as otherwise required by securities and other applicable laws.

SOURCE The Dow Chemical Company


Source: newswire