Dow board would consider dividend cut: CEO

Dow Chemical Company Chief Executive Officer Andrew Liveris delivers a speech at the Global Management Forum in Tokyo October 27, 2008.

NEW YORK (Reuters) - Dow Chemical Co (DOW.N) Chief Executive Andrew Liveris said on Tuesday the board would consider a dividend cut and all other options to ensure a strong investment grade rating.

"I'm not saying we will cut the dividend; that is up to the board of the Dow Chemical Company. I am saying that is an option we would have to look at long and hard," Liveris told Reuters in an interview.

In the past, Liveris has said repeatedly that Dow, the largest U.S. chemical maker, would not cut its dividend as long as he was chief executive.

Dow's stock, which has tumbled 60 percent over the last six months, currently offers a 12.9 percent dividend yield, one of the highest in the chemical sector. Analysts and investors have lately begun to grow skeptical about the dividend payout.

"To a large extent, (Dow's) stock is trading at these levels because there is a segment within the marketplace that thinks the dividend is going to be cut," said HSBC analyst Hassan Ahmed.

The shares were down 2 percent at $12.97 in morning trade on the New York Stock Exchange.

Over the last two years, Liveris has launched a two-pronged strategy to revamp the Midland, Michigan-based company's earnings profile.

Dow first announced plans to sell a 50 percent stake in its highly cyclical basic plastics business to Kuwaiti investors for more than $9 billion. Then, in July, it announced plans to acquire specialty chemical maker Rohm and Haas Co ROH.N for over $15 billion.

Dow's plans faltered after Kuwait backed out of the joint venture just days before the deal was to close.

Liveris said Dow has begun legal action against the Kuwaitis and is in discussions with two parties that are interested in a joint venture in the basic plastics business.

The collapse of the deal with Kuwait has jeopardized Dow's plans to buy Rohm and Haas. Dow had intended to use proceeds from the joint venture to help fund the Rohm and Haas buy.

On Monday, Dow said it would not close the Rohm and Haas deal on schedule, arguing that the recent economic downturn had made closing untenable at this time.

Rohm and Haas has sued Dow and asked a Delaware court to compel Dow to honor the merger agreement.

Liveris said Dow is considering all possible options in order to complete the Rohm and Haas transaction and remain worthy of an investment grade rating.

(Reporting by Euan Rocha, editing by Gerald E. McCormick and John Wallace)