DOW CUTS ITS BORROWING COSTS, REDUCING TOTAL LONG-TERM DEBT

DOW CUTS ITS BORROWING COSTS, REDUCING TOTAL LONG-TERM DEBT

Dow Chemical Co., taking advantage of low interest rates and innovative financing strategies, this year will reduce its corporate borrowing costs by about $100 million, J. Pedro Reinhardt, vice president, treasurer said last week.

Dow, in fact, is counting on a variety of financing schemes to reduce costs related to carrying the company's long-term debt. It stood at about $6 billion at year end.Dow recently, for example, sought to maximize the value of some company assets in order to cut borrowing costs. It did so by opening up some fully depreciated patents to outside investors, Mr. Reinhardt said.

By doing so, Dow has increased the value of an asset that it can barter, or borrow against, effectively lowering finance charges. The move also allows Dow to tap an alternative funding source, while at the same time avoiding third- party financing fees.

The company, moreover, recently revised to market value, for internal accounting purposes, the product portfolio of its Dow Brands subsidiary in Indianapolis. This was also done to reduce borrowing costs.

Dow concurrently is selling some leveraged, non-core businesses to reduce debt and related costs, Mr. Reinhardt said.