التفاصيل البيبلوغرافية
| العنوان: |
Dow Chemical Cannot Afford to Let Carbide Fall Into Bankruptcy. |
| المؤلفون: |
Copley, Graham L. copleygz@bernstein.com, Ahmed, Hassan I. ahmedhi@bernstein.com |
| المصدر: |
Black Book - Chemical Valuation & Margin Trends - With Third-Quarter Roundup (October 2003). 2003, p131-134. 4p. |
| مصطلحات موضوعية: |
*CORPORATE finance, *CASH flow, *FINANCIAL crises, *LIQUIDITY (Economics), *BUSINESS planning |
| مصطلحات جغرافية: |
UNITED States |
| الشركة/الكيان: |
UNION Carbide Corp. UK |
| مستخلص: |
The recent Moody's debt downgrade for Union Carbide is probably more of a negative for Dow's equity than for Carbide's debt, as we do not believe that Dow can allow Carbide to fail and that any cash injection required by Carbide is part of the financial troubles at Dow that we have been highlighting for some time. Dow cash flows look unlikely to hit Moody's target this year without $500+ million of divestments and, consequently, further debt downgrades are possible. Dow is unlikely to be forced to cut its dividend, but may elect to do so in order to address its high level of debt. Carbide's balance sheet looks better than Dow's overall balance sheet today, though it is expected to deteriorate more quickly with asset write-downs and limited cash flows. Carbide is more vulnerable to higher gas prices because the company now has assets only in the United States — all other assets have been acquired by Dow subsidiaries in exchange for stock in Dow subsidiary companies. Dow can dictate how much money its Carbide subsidiary makes, as 95% of Carbide's sales are to Dow and pricing can be adjusted to set cash flows at Carbide. This is likely to be the way in which Dow ensures that Carbide can meet its debt obligations without formally backing the debt. Given its comments that projections for Dow for 2003 and 2004 look too high, we are somewhat surprised that Moody's did not downgrade Dow's unsecured debt, and believe that a downgrade is possible by year-end. In order to continue to pay its dividend, Dow may have to accept that the company remains constrained from a business-opportunity perspective for many years, while at the same time limiting any possibility for growth by underinvesting. We believe that this is the wrong business decision. We rate Dow underperform with a $26 target price. [ABSTRACT FROM PUBLISHER] |
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| قاعدة البيانات: |
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