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Dow (DOW) Declares Completion of Senior Notes Offering

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Dow Inc.’s (DOW - Free Report) fully-owned subsidiary — The Dow Chemical Company ("TDCC") — has announced the closure of a public offering of €2,250,000,000 total principal amount of its notes.

TDCC has issued €750,000,000 of its 1.125% notes due 2032 along with €1,000,000,000 of its 0.5% notes due 2027 and €500,000,000 of its 1.875% notes due 2040 (together referred to as the ‘Euro Notes’).

The company will use the net proceeds to fund the redemption of existing notes. It is also expected to repay debt, including the full redemption of TDCC’s 3% notes due Nov 15, 2022. Notably, around $1.25 billion of the notes is outstanding and $750 million of the outstanding $2 billion principal balance under the term loan facility under TDCC’s fully-owned subsidiary — Dow Silicones Corporation. The company stated that it will use any remaining proceeds to repay other debts.

TDCC has also issued a notice for the full redemption of its issued 2022 notes, pursuant to an indenture dated as of May 1, 2008 between The Bank of New York Mellon Trust Company, N.A., as trustee and itself. As of the date of redemption notice issuance, there was $1,250,000,000 total principal amount of 2022 notes outstanding.

Dow’s shares have declined 20.7% in the past three months compared with the 13.9% fall of the industry.



Dow reported adjusted earnings of 78 per share in fourth-quarter 2019, which beat the Zacks Consensus Estimate of 74 cents.

Net sales declined around 15% year over year to $10,204 million in the quarter. Nevertheless, it beat the Zacks Consensus Estimate of $10,015.4 million.

In fourth-quarter 2019 earnings call, Dow stated that it will continue to focus on advancing its investments in higher-return growth projects, especially in sectors where it is seeing favorable demand conditions. The company also expects to retain its competitive cost positions by leveraging its unique feedstock capabilities.

Dow also expects to further reduce cost structure in 2020 as it completes the stranded cost removal. The company also intends to direct its free cash flows toward debt reduction and boost shareholders’ returns.

Zacks Rank & Key Picks

Dow currently carries a Zacks Rank #5 (Strong Sell).

Few better-ranked stocks in the basic materials space are Daqo New Energy Corp (DQ - Free Report) , Sibanye Gold Limited (SBSW - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Daqo New Energy has an expected long-term earnings growth rate of 29%. The company’s shares have surged 95.7% in the past year.

Sibanye has an expected long-term earnings growth rate of 20.4%. Its shares have returned 123.1% in the past year.    

Impala Platinum has an expected long-term earnings growth rate of 26.5%. The company’s shares have surged 123.2% in the past year.

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