Dow Chemical 2011 Annual Report Download - page 216

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On February 7, 2012, the Company notified bondholders of its intention to redeem its $1.25 billion, 4.85 percent notes
with an original maturity date of August 15, 2012, at the applicable make-whole redemption price plus accrued and unpaid
interest through the date of redemption. The full amount is expected to be redeemed on March 8, 2012.
Revolving Credit Facilities
On March 9, 2009, the Company borrowed $3 billion under its Five Year Competitive Advance and Revolving Credit Facility
Agreement, dated April 24, 2006 ("Agreement"); $1.6 billion of the funds were repaid on May 15, 2009; $0.5 billion of the
funds were repaid on June 30, 2009; and the remaining $0.9 billion of the funds were repaid on December 30, 2009. The funds
were due in April 2011 and bore interest at a variable London Interbank Offered Rate ("LIBOR")-plus rate or Base Rate as
defined in the Agreement. The Company used the funds to finance day-to-day operations, to repay indebtedness maturing in the
ordinary course of business and for other general corporate purposes.
In 2010, the Company replaced its Five Year Competitive Advance and Revolving Credit Facility Agreement, dated
April 24, 2006, with a new $3 billion Three Year Competitive Advance and Revolving Credit Facility Agreement dated June 4,
2010 ("Revolving Credit Facility") with various U.S. and foreign banks. The Revolving Credit Facility had a maturity date of
June 2013 and provided interest at a LIBOR-plus or Base Rate, as defined in the Revolving Credit Facility agreement.
On October 18, 2011, the Company entered into a new $5 billion Five Year Competitive Advance and Revolving Credit
Facility Agreement (the "2011 Revolving Credit Facility") with various U.S. and foreign banks. The new agreement, which
replaced the previous Revolving Credit Facility, has a maturity date in October 2016 and provides for interest at a LIBOR-plus
rate or Base Rate as defined in the 2011 Revolving Credit Facility agreement. At December 31, 2011, the full $5 billion credit
facility was available to the Company.
Financing Activities Related to the Acquisition of Rohm and Haas
Debt financing for the acquisition of Rohm and Haas was provided by a $9,226 million draw on a Term Loan Agreement dated
September 8, 2008 (“Term Loan”) on April 1, 2009. The original maturity date of the Term Loan was April 1, 2010, provided
however, that the maturity date could have been extended for an additional year at the option of the Company, for a maximum
outstanding balance of $8.0 billion. Prepaid up-front debt issuance costs of $304 million were paid. Amortization of the prepaid
costs was accelerated concurrent with the repayment of the Term Loan. The Term Loan was repaid through a combination of
proceeds obtained through asset sales and the issuance of debt and equity securities. At December 31, 2009, the Term Loan
balance was zero and the Term Loan was terminated.
On May 7, 2009, the Company issued $6 billion of debt securities in a public offering. The offering included $1.75 billion
aggregate principal amount of 7.6 percent notes due 2014; $3.25 billion aggregate principal amount of 8.55 percent notes due
2019; and $1 billion aggregate principal amount of 9.4 percent notes due 2039. Aggregate principal amount of $1.35 billion of
the 8.55 percent notes due 2019 were offered by accounts and funds managed by Paulson & Co. Inc. and trusts created by
members of the Haas family. These investors received notes from the Company in payment for 1.3 million shares of the
Company’s Perpetual Preferred Stock, Series B, at par plus accrued dividends (see Note V for further information). The
Company used the net proceeds received from this offering for refinancing, renewals, replacements and refunding of
outstanding indebtedness, including repayment of a portion of the Term Loan.
On August 4, 2009, the Company issued $2.75 billion of debt securities in a public offering. The offering included
$1.25 billion aggregate principal amount of 4.85 percent notes due 2012; $1.25 billion aggregate principal amount of
5.90 percent notes due 2015; and $0.25 billion aggregate principal amount of LIBOR-plus based floating rate notes due 2011.
The Company used the net proceeds received from this offering for refinancing, renewals, replacements and refunding of
outstanding indebtedness, including repayment of a portion of the Term Loan.
The fair value of debt assumed from Rohm and Haas on April 1, 2009 of $2,576 million is reflected in the long-term debt
table above. On August 21, 2009, the Company executed a buy-back of Euro 175 million of private placement debt acquired
from Rohm and Haas and recognized a $56 million pretax loss on this early extinguishment, included in “Sundry income
(expense) – net.” On September 8, 2010, the Company concluded a tender offer for any and all of $145 million of debentures
acquired from Rohm and Haas, due June 2020. As a result of the tender offer, the Company redeemed $123 million of the
debentures and recognized a $46 million pretax loss on this early extinguishment, included in “Sundry income (expense) –
net.”
Debt Covenants and Default Provisions
The Company’s outstanding debt of $21.1 billion has been issued under indentures which contain, among other provisions,
covenants with which the Company must comply while the underlying notes are outstanding. Such covenants include
obligations to not allow liens on principal U.S. manufacturing facilities, enter into sale and lease-back transactions with respect