UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported): March 5, 2009
THE
DOW CHEMICAL COMPANY
(Exact
name of Registrant as specified in its charter)
|
Delaware
(State
or other jurisdiction
of
incorporation)
|
1-3433
Commission
File Number
|
38-1285128
(IRS
Employer
Identification
No.)
|
|
|
|
|
|
2030
Dow Center, Midland, Michigan
(Address
of principal executive offices)
|
48674
(Zip
code)
|
|
|
|
|
(989)
636-1000
(Registrant’s
telephone number, including area code)
|
|
|
|
N.A.
(Former
name or former address, if changed since last
report)
|
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
|
Item
1.01
|
Entry into a Material
Definitive Agreement
|
On
September 8, 2008, The Dow Chemical Company (the “Company”), as borrower,
entered into a Term Loan Agreement (the “Original Agreement”) with the lenders
party thereto and Citibank, N.A., as administrative agent for the lenders, in
order to partially finance the acquisition by the Company (the “Acquisition”) of
Rohm and Haas Company (the “Target”), to retire certain debt of the Target and
to pay related costs and expenses. On March 5, 2009, the parties to
the Original Agreement entered into a First Amendment to Term Loan Agreement
(the “First Amendment”) in order to amend the Original Agreement (as so amended,
the “Loan Agreement”).
Under the
Loan Agreement, the lenders have committed to lend to the Company an aggregate
principal amount that will not exceed the sum of each of their commitments, the
total amount of which was reduced by $500,000,000 to $12,500,000,000 pursuant to
the First Amendment, in a single term borrowing on the date of the closing of
the Acquisition. The Loan Agreement will mature on the earlier of (a)
the first anniversary of the closing date and (b) April 14, 2010; provided,
however, that the original maturity date of the Loan Agreement may be extended
to the date occurring one year following the original maturity date, at the
option of the Company, subject to the satisfaction of certain conditions
precedent, including (i) the absence, since December 31, 2008, of a material
adverse change in the financial position or operations of the Company and its
consolidated subsidiaries, considered as a whole (except for the Acquisition and
the financing thereof and except for any changes disclosed in the Company’s
Annual Report on Form 10-K for the fiscal year ended December 31, 2008; provided
that any changes or developments relating to matters so disclosed (and the
effects thereof) that arise after December 31, 2008 may be taken into account in
determining whether a material adverse change has occurred), (ii) compliance
with the total leverage ratio covenant described below as of the original
maturity date, if such covenant is applicable on such date, (iii) the reduction
of the aggregate principal amount of the loans under the Loan Agreement to
$8,000,000,000 or less, and (iv) the payment of an extension fee equal to 2% of
the aggregate principal amount of the outstanding loans after giving effect to
the extension.
The Loan
Agreement permits loans bearing interest at a rate per annum equal to either the
prime rate or LIBOR plus, in each case, a margin that varies based on the
Company’s credit rating (the “Applicable Margin”); provided, however, that if
the original maturity date of the Loan Agreement is extended as described in the
preceding paragraph, then the Applicable Margin shall increase, as set forth in
the Loan Agreement, on the date of extension, on the 90th day
following such date and on each successive 90th day
thereafter.
The
Company has agreed to pay to the lenders a structuring fee equal to 1.25% of the
aggregate amount of the lenders’ commitments. Additionally, under the
Loan Agreement, the Company is obligated from time to time to pay certain
duration fees to the lenders, as set forth in the Loan
Agreement. Higher rates will apply to certain of these fees (i)
unless, on or prior to the 90th day
following the date of the closing of the Acquisition, the Company consummates
one or more sales of certain equity interests or equity-linked securities for
which it receives aggregate gross cash proceeds of at least $1,500,000,000
(calculated, in the case of equity-linked securities, based on the amount of
“equity credit” accorded thereto by certain rating agencies) (a “New Equity
Issuance”) or (ii) if a New Equity Issuance does occur on or prior to such
90th
day following the date of the closing of the Acquisition, but the outstanding
indebtedness
under the Loan Agreement has not been reduced to the extent specified under the
Loan Agreement.
The Loan
Agreement contains provisions relating to mandatory prepayment and reduction of
commitments of the loans in certain circumstances, such as receipt by the
Company or any of its consolidated subsidiaries of proceeds from any sale of
assets the proceeds of which exceed $50 million, incurrence of indebtedness for
borrowed money (other than (i) commercial paper issued by the Company in the
normal course of business and consistent with past practice, (ii) refinancings,
renewals, replacements or refundings of indebtedness whether outstanding on the
date of the effective date of the Original Agreement or thereafter, (iii) any
indebtedness incurred to finance the day-to-day operations of the Company and
its subsidiaries in the normal course of business and any indebtedness incurred
to finance loans to, or other investments in, joint ventures of the Company and
its subsidiaries, and (iv) certain other indebtedness) the proceeds of which
exceed $50 million, any sale or issuance of certain equity interests or
equity-linked securities, or any litigation, arbitration, settlement or other
dispute resolution related to the proposed K-Dow joint venture transaction, in
each case subject to agreed exceptions.
Subject
to certain conditions, the Company may at its option prepay in whole or in part
the principal amount of the loans together with accrued interest.
The Loan
Agreement contains affirmative and restrictive covenants, including: (a)
periodic financial reporting requirements, (b) limitations on liens, (c) the
requirement that the ratio of the Company’s consolidated indebtedness (as
defined in the Loan Agreement) to its consolidated capitalization (as defined in
the Loan Agreement) not be greater than 0.65 to 1.00, (d) limitations on sale
and lease-back transactions, (e) limitations on consolidations, mergers and
sales of assets and (f) a requirement to provide guarantees from any subsidiary
that guarantees certain other indebtedness of the Company. In
addition, the Company has agreed to use the proceeds of the loans solely to (i)
finance the acquisition of the Target, (ii) repay indebtedness of the Target and
its subsidiaries that the Company elects to repay on the closing date and (iii)
finance related transaction costs. Furthermore, if and when both of
the Company’s credit ratings from Moody’s and S&P fall below certain levels
or no credit rating is available (or, if the New Equity Issuance does not occur
on or prior to the 90th day
following the date of the closing of the Acquisition, if either of the Company’s
credit ratings from Moody’s or S&P falls below certain levels or no credit
rating is available), the Company will not permit the total leverage ratio (as
defined in the Loan Agreement) to be greater than certain levels (initially 5.75
to 1.00 and progressively declining to 4.25 to 1.00 at September 30, 2010 and
thereafter). The Loan Agreement contains customary events of
default.
Under the
Loan Agreement, the Company has agreed that unless the Company’s credit rating
from Moody’s is Baa3 or higher (with at least a stable outlook) and the
Company’s credit rating from S&P is BBB- or higher (with at least a stable
outlook), then upon notice by the administrative agent at any time and from time
to time following the 60th day
after the day the loans are extended beyond their original maturity date, the
Company will offer and, if certain investment banks are able to place the
securities referred to below, issue and sell, prior to the 30th day
after such notice (subject to extension by an additional 15 days for blackout
periods and other events), such aggregate principal amount of debt securities as
will generate gross proceeds sufficient to refinance (in whole or in part, as
determined by the administrative agent) all outstanding loans under the Loan
Agreement, subject to a maximum interest rate and certain
other
conditions. So long as the Company complies with the request to offer
such securities, failure of the investment banks to place and sell such
securities shall not constitute a default under the Loan
Agreement. If the Company fails to offer such securities as described
above, such failure would constitute a default under the Loan Agreement and
result in an increase in the interest rate payable thereunder.
The
foregoing summary of the Loan Agreement does not purport to be complete and is
subject to, and qualified in its entirety by, the full text of the Original
Agreement, which was attached as Exhibit 99.1 to the Company’s Current Report on
Form 8-K dated September 8, 2008, and the full text of the First Amendment,
which is attached as Exhibit 10.1 hereto and incorporated herein by
reference.
On March
5, 2009, the Company also entered into a Securities Issuance Letter (the
“Securities Issuance Letter”) with Citigroup Global Markets Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Morgan Stanley Senior Funding, Inc.
(the “Arrangers”), pursuant to which the Company confirmed that, subject to the
effectiveness of the First Amendment, the closing of the Acquisition, compliance
with all applicable laws and regulations, and other customary conditions
precedent, the Company was committed to issuing up to $3 billion of debt prior
to or within 90 calendar days after the closing of the Acquisition (subject to
extension under certain circumstances), so long as (a) the yield on such debt is
no higher than a rate separately agreed between the Company and the Arrangers,
(b) such debt is unsecured and not guaranteed by any subsidiaries of the
Company, and (c) unless otherwise agreed by the Company, such debt does not
contain covenants, defaults or other provisions materially adverse to the
Company other than those contained in the Company’s 5.7% Senior Notes due 2018
and a ratings-based interest adjustment. The Securities Issuance
Letter provides that the inability or other failure by the Company to issue or
offer to issue such debt shall not constitute a default under the Loan Agreement
or other agreements of the Company.
The
Securities Issuance Letter is attached as Exhibit 10.2 hereto and incorporated
herein by reference.
|
Item
2.03
|
Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant
|
On March
5, 2009, the Company entered into the First Amendment (the “First Amendment”) to
the Term Loan Agreement (the “Original Agreement” and together with the First
Amendment, the “Loan Agreement”) with the lenders party thereto and Citibank,
N.A., as administrative agent for the lenders.
Additional
information included in Item 1.01 above regarding the Loan Agreement is
incorporated by reference into this Item 2.03, and the foregoing description of
the Loan Agreement is qualified in its entirety by reference to the full text of
the Original Agreement filed as Exhibit 99.1 to the Company’s Current Report on
Form 8-K dated September 8, 2008, and the full text of the First Amendment
attached as Exhibit 10.1 hereto and incorporated herein by
reference.
|
Item
9.01
|
Financial Statements
and Exhibits
|
|
|
10.1
|
First
Amendment to the Term Loan Agreement, dated as of March 4,
2009
|
|
|
10.2
|
Securities
Issuance Letter, dated as of March 4,
2009
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March
6, 2009
| |
The
Dow Chemical Company |
|
| |
|
|
|
|
| |
|
|
|
|
| |
By: |
/s/ CHARLES J.
KALIL |
|
| |
|
Name:
|
Charles J.
Kalil |
|
| |
|
Title:
|
Executive Vice
President, |
|
| |
|
|
Corporate
Secretary and General Counsel |
|