Dow Chemical Expects Order of Final Kuwait Award by Year-End

Dow Chemical Co. (DOW), the largest U.S. chemical company by sales, said arbitrators should order Kuwait by year-end to pay more than $2.16 billion now that appeals have been exhausted in a dispute over a failed plastics venture.

The International Chamber of Commerce is expected to issue a final order for the $2.16 billion plus “substantial” interest and arbitration costs in the fourth quarter, Midland, Michigan-based Dow said today in a regulatory filing. The High Court of Justice in London on Oct. 19 denied Kuwait’s final appeal to reconsider the size of the award, Dow said.

Kuwait’s Petrochemical Industries Co., under pressure from lawmakers, canceled a contract to form a 50-50 venture with Dow’s plastics unit in December 2008. The failure of the so- called K-Dow venture deprived Dow of a $9 billion payment during the global financial crisis, almost derailed its 2009 purchase of Rohm & Haas Co. and prompted the company’s first dividend cut.

“We believe Kuwait will honor the decision,” Dow Chairman and Chief Executive Officer Andrew Liveris said on an Oct. 24 conference call to discuss third-quarter results. “It’s a country that belongs to the nations of the world. It is not a rogue nation.”

The Kuwait award is expected “to go to the balance sheet and to reward our shareholders,” Liveris said on the call.

Dow may use the proceeds to redeem $3 billion of preferred shares from Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), Liveris said July 26. Dow sold the securities, which pay an average 8.5 percent annual dividend, to help fund the Rohm & Hass acquisition.

To contact the reporter on this story: Jack Kaskey in Houston at jkaskey@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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