Dow Chemical sets reference yields for Dutch auction tender offers

By Angela McDaniels

Tacoma, Wash., March 8 - Dow Chemical Co. set the U.S. Treasury reference yields to be used to price its modified Dutch auction tender offers for up to $750 million principal amount of notes, according to a company news release.

As previously reported, the company will accept up to $450 million of its $3.25 billion 8.55% notes due 2019 and subsidiary Union Carbide Corp.'s $200 million 7.75% debentures due 2096.

Dow will accept up to $300 million of its $1 billion 9.4% notes due 2039 and subsidiary Rohm & Hass Co.'s $881.8 million 7.85% debentures due 2029.

The tender offers are subject to proration if oversubscribed.

The prices paid in the offers will be set using the yield to maturity of a reference Treasury security plus a spread determined through a modified Dutch auction.

The reference Treasury is the 3.625% Treasury due Feb. 15, 2021 for Dow's 8.55% notes and the 4.25% Treasury due Nov. 15, 2040 for the three remaining note series. The reference yields for the two reference Treasuries are 3.546% and 4.67%, respectively.

The reference yields were set based on the bid-side prices of the reference Treasuries at 2 p.m. ET on March 8.

The acceptable bid spread range is 90 basis points to 120 bps for Dow's 8.55% notes, 260 bps to 290 bps for Union Carbide's 7.75% debentures, 110 bps to 140 bps for Dow's 9.4% notes and 140 bps to 170 bps for Rohm & Hass' 7.85% debentures.

The prices will include an early participation amount of $30 per $1,000 principal amount of notes tendered by 5 p.m. ET on March 8, the early participation date.

The offers began Feb. 23 and will expire at midnight ET on March 22.

All notes purchased in the offers will be canceled.

The tender offers are part of a series of debt-reduction activities the company plans to execute in the first quarter, including the payoff of $800 million of matured debt and more than $150 million of InterNotes. Taken together, these actions will reduce Dow's overall debt by more than $1.5 billion.

The lead dealer managers are Goldman Sachs & Co. (800 828-3182 or 212 902-5128) and J.P. Morgan Securities LLC (866 834-4666 or 212 834-2494). The co-dealer managers are ING Financial Markets LLC, RBC Capital Markets, LLC and Scotia Capital (USA) Inc.

Global Bondholder Services Corp. (212 430-3774 for banks and brokers, others call 866 389-1500) is the information agent and depositary.

Dow is a specialty chemical, plastics and technology company based in Midland, Mich.

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