S&P keeps Dow, Rohm & Haas on watch

Standard & Poor's said its BBB corporate credit and senior unsecured debt ratings on Dow Chemical Co. and Rohm & Haas Co. remain on CreditWatch with negative implications.

The agency said the CreditWatch indicates the continuing risk that the ratings could be lowered if Dow completes the acquisition of Rohm & Haas or if it does not complete the acquisition and becomes liable for a judgment or settlement that, in S&P's view, meaningfully undermines its financial profile.

S&P said that in resolving the CreditWatch, it will consider the outcome of Rohm & Haas' lawsuit against Dow in the Court of Chancery of the State of Delaware to compel Dow to complete its acquisition of Rohm & Haas for $78 a share as agreed in July 2008. The trial is set to begin March 9.

In addition to the legal process, the CreditWatch will focus on the agency's previously stated concerns associated with Dow's pending debt-financed acquisition of Rohm & Haas in a transaction valued at more than $19 billion and S&P's opinion of Dow's weak operating performance and diminished visibility on near-term operating prospects.

Despite the above risks, the agency said it remains possible that Dow will be able to support the current ratings if it can successfully renegotiate the extension of the one-year bridge loan that would be used to close the Rohm & Haas acquisition or if Dow is able to disengage from its agreement to acquire Rohm & Haas.

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