Dow Announces Tender Offer for Debt Securities
Dow Chemical Company, a wholly owned subsidiary of Dow Inc. has announced the commencement of a cash tender offer to purchase certain debt securities from both its own portfolio and those of its subsidiaries, Rohm and Haas Company and Union Carbide Corporation. The debt securities involved in the Tender Offer include those issued by TDCC and its subsidiaries. This article outlines the key details of the offer, including the conditions, pricing mechanism, and important dates.
Overview of the Tender Offer
In its announcement, Dow disclosed that TDCC is offering to purchase certain debt securities for a total purchase consideration (excluding accrued interest) of up to $1.0 billion (the “Tender Cap”). The securities are drawn from TDCC and its subsidiaries, and once accepted, the purchased securities will be retired and cancelled. The Tender Offer is subject to certain conditions, including the Financing Condition (as defined in the offer documents) and a number of legal and market developments. TDCC retains the discretion to waive certain conditions or extend, terminate, or amend the offer if necessary, in accordance with applicable law.
Tender Offer Details:
- Target Amount: The maximum purchase consideration for the debt securities being offered in this tender is set at $1.0 billion, excluding accrued interest.
- Sublimits: The offer is subject to sublimits for certain securities, which may limit the maximum purchase amount for each series. For example, for the 0.500% Notes due 2027, the purchase consideration is capped at €500,000,000, and for the 9.400% Notes due 2039, it is capped at $100,000,000.
- Flexibility: Dow reserves the right to adjust these amounts at its discretion without extending the withdrawal date or reinstating withdrawal rights, unless required by law.
Key Dates and Participation
The Tender Offer has a defined timeline for investors wishing to participate, with key dates outlined below:
- Early Participation Date: March 10, 2025, at 5:00 p.m., New York City time.
- Expiration Date: March 25, 2025, at 5:00 p.m., New York City time (subject to extension).
Participants who tender their securities by the Early Participation Date will be eligible for early settlement, with payment expected on or around March 13, 2025. For those who tender securities after the Early Participation Date but before the expiration, the payment will be made promptly following the expiration, on or around March 28, 2025.
Pricing Mechanism for Securities
The price for each series of the securities will be determined based on fixed spreads to specific reference benchmarks. The benchmarks are designed to reflect the prevailing market conditions at the time of the offer. For U.S. dollar-denominated securities, the price will be based on the yield to maturity (or the par call date, if applicable) of a reference security, adjusted for a fixed spread. For euro-denominated securities, the price will be calculated based on an interpolated mid-swap rate.
Purchase Process
Holders whose securities are accepted in the Tender Offer will receive the relevant cash consideration, along with accrued interest from the most recent interest payment date up to the settlement date. The following outlines how the payment is expected to be handled:
- Early Settlement: If early settlement rights are exercised, payment will be made promptly after the Early Participation Date, expected on or around March 13, 2025.
- Standard Settlement: For securities tendered after the Early Participation Date, the settlement will take place on or around March 28, 2025, following the expiration of the offer.
Specific Securities Involved
The Tender Offer targets specific debt securities, with different terms and sublimits for each series. The following table summarizes the details for the securities involved in the offer:
Table I: Securities to Be Purchased in the Tender Offer
| Title of Security | Security Identifier(s) | Issuer | Principal Amount Outstanding | Purchase Consideration | Acceptance Sublimit | Acceptance Priority Level | Early Participation Amount | Reference Security / Interpolated Rate | Bloomberg Reference Page / Screen | Fixed Spread (Basis Points) |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.500% Notes Due 2027 | ISIN: XS2122485845 | TDCC | €1,000,000,000 | €500,000,000 | 1 | €30 | Interpolated Rate | IRSB EU (Pricing Source: BGN) | +25 | |
| 7.850% Debentures Due 2029 | CUSIP: 775371AU1 | Rohm and Haas | $595,078,000 | None | 2 | $30 | 4.250% UST due January 31, 2030 | PX1 | +55 | |
| 7.375% Debentures Due 2029 | CUSIP: 260543BJ1 | TDCC | $778,773,000 | None | 3 | $30 | 4.250% UST due January 31, 2030 | PX1 | +40 | |
| 6.300% Notes Due 2033 | CUSIP: 260543DG5 | TDCC | $600,000,000 | None | 4 | $30 | 4.625% UST due February 15, 2035 | PX1 | +65 | |
| 9.400% Notes Due 2039 | CUSIP: 260543BY8 | TDCC | $557,943,000 | $100,000,000 | 5 | $30 | 4.625% UST due February 15, 2035 | PX1 | +130 | |
| 7.750% Debentures Due 2096 | CUSIP: 905581AS3 | UCC | $135,172,000 | None | 6 | $30 | 4.500% UST due November 15, 2054 | PX1 | +155 |
Final Thoughts and Considerations
Dow’s tender offer for its debt securities represents a strategic move to manage its debt portfolio effectively, with a clear focus on optimizing its financial position. Investors participating in this offer should carefully review the full terms outlined in the Offer to Purchase document and consider the relevant sublimits and priority levels associated with their holdings. The fixed spreads applied to the securities and the conditions for settlement offer clear terms for those looking to take part in the offer.
The Tender Offer is an important element of Dow’s ongoing financial strategy, allowing the company to refine its debt structure, improve liquidity, and align its financial obligations with its broader corporate goals. As the company moves through this process, stakeholders will be closely monitoring the outcomes and any changes to the offer’s parameters.
