Dow Chemical not breaking Buffett tie

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Posted: Wednesday, December 4, 2013 12:00 am | Updated: 1:52 am, Tue May 20, 2014.

Andrew Liveris, the chairman and chief executive officer of Dow Chemical Co., said he's not going to be hurried into paying too much to redeem $3 billion of convertible preferred shares held by Warren Buffett.

“The premium for exit right now doesn't suit our shareholders,” Liveris said.

Dow pays an 8.5 percent annual dividend on the preferred shares that Buffett bought in 2009. The funds helped Midland, Mich.-based Dow acquire Rohm & Haas Co. when access to capital was tighter.

Falling interest rates since then made it attractive for Goldman Sachs, General Electric and Mars to pay premiums to exit investments that Buffett made in 2008. His Omaha-based Berkshire Hathaway got at least 10 percent a year through deals with those companies.

Liveris had been working to reduce debt after receiving $2.19 billion from Petrochemical Industries Co. of Kuwait as compensation for the cancellation of a joint venture more than four years ago. He said last year that preferred shares were among the securities he would consider targeting.

Dow's stock has climbed about 20 percent this year, closing Tuesday at $38.72, after gaining 12 percent in 2012.

The preferred stake can be converted to 72.6 million shares of Dow common stock for $41.32 each. Starting in April 2014, Dow has the right to swap the investment into common stock if its shares trade above $53.72 for any 20 trading days in a consecutive 30-day window.

“It's worth the ride up, so he'll stay,” Liveris said of Buffett. “We don't spend mindspace on this. Once a quarter or so, we have a conversation, and then we move on.”

The Omaha World-Herald Co. is owned by Berkshire Hathaway Inc.

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