Doing the simple math with Dow’s (DOW) 1.17B shares outstanding means this action will add ~$0.17 to EPS annually. Here is a post I wrote last October in regards to Dow’s debt and the dividend. The math on it still stands (and actually has improved), so we still should expect some action on the dividend this year.
The true irony here is that the actions of the Kuwaitis in December of 2008, while they brought the company to its knees then, are a godsend now. The basic chemical business Dow was going to sell to them that they still own now is a “feast or famine” business. Now that we are undergoing a global expansion, we are in the “feast” stage of it -- and it is a massive contributor to current results.
That simply means that all of us who cursed Dow then (hand raised here) should all thank it now. From yesterday's news release:
The Dow Chemical Company announced today the final results for its previously announced modified “Dutch Auction” cash tender offers for $1.5 billion aggregate principal amount of certain notes issued by Dow and its subsidiaries, Union Carbide Corporation and Rohm & Haas Company (ROH).
This announcement represents the final component of a series of debt reduction activities Dow has executed in the first quarter, including the pay-off of $950 million of maturing and other debt. Taken together, these actions enabled Dow to reduce its gross debt by $2.5 billion, and will reduce the Company’s interest expense by nearly $200 million on an annual basis.
“This is a strong example of Dow’s focus on executing against our stated priorities for 2011 — namely, deleveraging and further enhancing our financial flexibility,” said Bill Weideman, Dow’s executive vice president and chief financial officer. “Our actions this quarter will deliver a structural reduction in interest expense, which is accretive to our common shareholders going forward while still maintaining a cash balance above historical levels, illustrating our strengthened capital structure.”