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Petronas buys Optimal from Dow for US$660 mn

31
Jul '09
The Dow Chemical Company and Petroliam Nasional Berhad (PETRONAS) announced that they have reached an agreement for Dow's Union Carbide Corporation subsidiary to sell its entire shares of ownership in the OPTIMAL Group of Companies (OPTIMAL) to PETRONAS for $660 million. PETRONAS would fund this acquisition through internally generated funds. The transaction, subject to customary conditions and approvals, is expected to close by the end of the third quarter of 2009.

Dow and PETRONAS have agreed to enter into a commercial supply agreement allowing the two companies to continue serving the current customer base with products manufactured by OPTIMAL. Dow will market OPTIMAL's basic and performance chemicals products to Dow's existing customer base in Asia Pacific.

“OPTIMAL has been a great investment, thanks to the dedication and hard work of our joint venture employees and our partner PETRONAS,” said Andrew N. Liveris, Dow Chairman and Chief Executive Officer. “With this transaction, we hand over the management of these businesses to PETRONAS, while at the same time remaining committed to our customers in the region. This divestiture and commercial arrangement demonstrate Dow's ability to increase its financial flexibility and to continue to de-leverage the balance sheet."

“Our purchase of Dow's equity in OPTIMAL would enable us to strengthen our presence in Olefins and reinforce the growth of the Malaysian petrochemical industry,” said Mohd Hassan Marican, President and Chief Executive Officer of PETRONAS. “We have had an excellent working relationship with Dow over the years in OPTIMAL, and we expect that will continue, with Dow now becoming one of OPTIMAL's largest customers.”

The change in ownership is not expected to have any immediate effect on employment in the region. OPTIMAL's focus continues to be operating safely, responsibly and effectively while providing world-class products for customers throughout Asia.

The announcement of Dow's divestiture of OPTIMAL follows other actions designed to increase Dow's financial flexibility, improve its cash flow, and pay down its bridge loan. Recent actions include:

• Announced the $1.7 billon sale of Morton Salt, a transaction expected to close in the second half of 2009
• Sold the Company's Calcium Chloride business to Occidental Petroleum for a value in excess of $210 million
• Announced a definitive agreement for the sale of interests in Total Raffinaderij Nederland N.V. (TRN) for an enterprise value expected to be approximately $725 million, also expected to close in the second half of 2009
• Issued $6 billion of new long-term debt
• Issued $2.25 billion of new equity
• Eliminated $3 billion of perpetual preferred securities from the capital structure.

As a result of these actions, the Company is ahead of all of its financial milestones, including the paydown of the bridge loan utilized to acquire Rohm and Haas.


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