Dow Chemical 2012 Annual Report Download - page 141

115
On October 10, 2012, the Company entered into a $170 million Bilateral Revolving Credit Facility Agreement ("2012
Credit Facility"). The 2012 Credit Facility, which is in addition to the existing 2011 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 agreement. At December 31,
2012, the full $170 million credit facility was available to the Company.
Financing Activities Related to the Acquisition of Rohm and Haas
The fair value of debt assumed from Rohm and Haas on April 1, 2009 was $2,576 million. 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” in the consolidated statements of income and
reflected in Corporate.
Debt Covenants and Default Provisions
The Company’s outstanding debt of $20.6 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
to principal U.S. manufacturing facilities, or merge or consolidate with any other corporation, or sell or convey all or
substantially all of the Company’s assets. The outstanding debt also contains customary default provisions. Failure of the
Company to comply with any of these covenants could result in a default under the applicable indenture, which would allow
the note holders to accelerate the due date of the outstanding principal and accrued interest on the subject notes.
The Company’s primary credit agreements contain covenant and default provisions in addition to the covenants set forth
above with respect to the Company’s debt. Significant other covenants and default provisions related to these agreements
include:
(a) the obligation to maintain the ratio of the Company’s consolidated indebtedness to consolidated capitalization at no
greater than 0.65 to 1.00 at any time the aggregate outstanding amount of loans under the Five Year Competitive
Advance and Revolving Credit Facility Agreement dated October 18, 2011 equals or exceeds $500 million,
(b) a default if the Company or an applicable subsidiary fails to make any payment on indebtedness of $50 million or
more when due, or any other default under the applicable agreement permits or results in the acceleration of
$200 million or more of principal, and
(c) a default if the Company or any applicable subsidiary fails to discharge or stay within 30 days after the entry of a final
judgment of more than $200 million.
Failure of the Company to comply with any of the covenants or default provisions could result in a default under the
applicable credit agreement which would allow the lenders to not fund future loan requests and to accelerate the due date of the
outstanding principal and accrued interest on any outstanding loans.
NOTE 17 – PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Pension Plans
The Company has defined benefit pension plans that cover employees in the United States and a number of other countries. The
U.S. qualified plan covering the parent company is the largest plan. Benefits for employees hired before January 1, 2008 are
based on length of service and the employee’s three highest consecutive years of compensation. Employees hired after
January 1, 2008 earn benefits that are based on a set percentage of annual pay, plus interest.
The Company’s funding policy is to contribute to the plans when pension laws and/or economics either require or
encourage funding. In 2012, Dow contributed $903 million to its pension plans, including contributions to fund benefit
payments for its non-qualified supplemental plans. Dow expects to contribute approximately $900 million to its pension plans
in 2013.