Update on “Dow Chemical Company” - Saving the Titanic and Rewarding Shareholders!

Shares of Dow Chemical Co. soared in last two month, $6.33/share in March to $17.50/share in early May 2009.

To take advantage of this opportunistic window, Dow has issued $6 billion of debt in a public offering to help pay down some of the funding used in the R&H acquisition. The debt will be offered in three series with different interest rates, coming due in 2014, 2019 and 2039. Dow will use the proceeds to retire the high-dividend stock issued to Paulson & Co. and trusts of the Haas family, as well as to help repay a $9.2 billion bridge loan. Both the high-dividend stock and the bridge loan were used to fund the R&H deal. Paulson & Co. and trusts of the Haas family will offer $1.35 billion of the debt. This is a significant move by Dow as the preferred shares pay an unusually high dividend of about 15%, and paying them off as quickly as possible should save the company cash.

Dow Chemical Company has also announced an offering of $1.63 billion in common stock early part of last week. The offering will increase the company's outstanding shares by about 11%, or 99.5 million shares, sharply diluting the stake of current shareholders.

We all remember Dow’s announcement to slash its dividend to save $1 billion a year.

Dow is also very active in shading businesses, such as selling Morton International salt to Germany's K+S for $1.68 billion in cash, to help pay down debt acquired in the chemical giant's purchase of Rohm & Haas.

Dow has also indicated previously for selling a number of other business interest, such as it may sell its 45% stake in Total Raffinaderi Nederland NV, a Dutch petroleum-refining partnership, or some of its interests in its olefins and derivatives business in Southeast Asia.

Dow Chemical has been aggressive in cutting cost and letting go thousands of employees and many more to go.

The key question remains, will the Dow Chemical stock “DOW” return to it’s height at $ 43.43/share. If so, how soon?