Dow share gains could allow it to retire expensive preferred shares

摘要

A rally in Dow Chemical’s share price, helped by yesterday’s strong second-quarter earnings report, has put the company in a position to convert $4 billion in preferred shares that carry an expensive $340-million/year dividend. Dow’s shares closed at $53.89/share yesterday, the highest level in more than nine years, and the company will be able to convert the preferred shares to common shares if the stock price exceeds $53.72/share for 20 trading days over the next month. Berskhire Hathaway, run by Warren Buffett, owns $3 billion in preferred shares and the state-owned Kuwait Investment Authority (KIA) owns $1 billion in preferred shares. Dow is currently paying an 8.5% dividend on the preferred shares or $340 million on an annualized basis. Dow issued the preferred shares in April 2009 to help fund its purchase of Rohm and Haas.