US CF Industries completes $1.4bn phosphate sale to Mosaic

Mark Milam

17-Mar-2014

US CF Industries completes $1.4bn phosphate sale to Mosaic HOUSTON (ICIS)–CF Industries has completed the sale of its phosphate business to Mosaic for $1.4bn, the US fertilizer producer announced on Monday.

Mosaic and CF agreed on a deal for $1.2bn in cash plus $200m to fund CF’s asset retirement obligation escrow in October 2013. The deal included a phosphate mine and plant in Hardee County, Florida, as well as an ammonia terminal and product warehouse in Tampa.

The facilities currently produce approximately 1.8m tonnes of phosphate fertilizer per year, which will bring Mosaic’s annual phosphates capacity to over 11m tonnes.

Mosaic funded the acquisition with cash, a portion of which the producer plans to replace with pre-payable intermediate term debt financing. The company intends to repay this debt financing as it generates excess free cash flows.

“The net proceeds from the sale will be redeployed to execute the strategic initiatives we already have in progress, namely our nitrogen capacity expansions and completing our share repurchase authorisation. Additionally, the supply agreements we have put in place with Mosaic will provide us a steady base of ammonia demand with attractive economics,” said Tony Will, CF CEO.

CF said that it will begin to supply Mosaic with its share of the ammonia produced by the company’s 50% owned production facility located in Trinidad. Additionally CF has a long-term agreement with Mosaic to supply ammonia for up to 15 years from its Donaldsonville, Louisiana, complex. Deliveries will begin no later than 1 January 2017 and will be priced at a defined margin over the cost of natural gas at Donaldsonville.

Mosaic officials said the acquisition complements its existing Florida operations and the company’s plans to mine phosphate rock reserves in Hardee and Desoto counties.

“This acquisition provides opportunities for enhanced operating efficiencies, lower production costs and reduced capital investment, creating value for our shareholders, customers and employees,” said James Prokopanko, Mosaic CEO. “The addition of these new phosphate assets further solidifies Mosaic’s position among the largest, most efficient and lowest cost phosphate producers in the world.”

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