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BHP to buy Athabasca Potash; continues to strengthen stance as possible Saskatchewan greenfield producer

Featured, News, Potash, Saskatchewan

Just one week after saying it would pump $240 million into potash mine development in Saskatchewan (GM Jan. 25, p. 1), mining giant BHP Billiton said Jan. 28 that it would buy Athabasca Potash Inc. (API), its second junior potash company – the first being Anglo Potash Inc. in 2006.

API’s Burr Project sits next door to BHP’s Jansen Project. Of all the many companies talking about potash mines in Saskatchewan, only BHP, API, and Potash One Inc. have actually applied for mining permits. API holds one of the largest exploration permit areas in the Saskatchewan basin, covering approximately 6,900 km2. The acquisition gives BHP access to a total of more than 14,000 km2.

BHP is paying C$8.35 cash per common share for a total equity value of C$341 million (US$320 million) on a fully diluted basis. The consideration represents a 105 percent premium to the closing market price of the common shares on July 15, 2009, the day preceding API’s announcement that it had expanded the scope of transactions being considered in its strategic review process to include potential mergers or acquisitions of all or a portion of API or its business. It represents a 25 percent premium over the closing price of the common shares on the Toronto Stock Exchange on Jan. 27, 2010, and a 37 percent premium based on the volume weighted average price of the common shares over the 60 trading days prior to Jan. 28, 2010.

API’s board of directors unanimously approved the transaction, which will be subject to the approval of 66-2/3 percent of the votes cast by API’s security holders and a simple majority of the votes cast by the shareholders. The vote will take place at a special meeting, which is currently anticipated to occur in March 2010. The acquisition will also require court approval. If API’s security holders approve the transaction and the requisite court approval is obtained, the closing is expected to take place later in March 2010. The information circular for the acquisition is expected to be mailed to API’s security holders by Feb. 12, 2010.

Dawn Zhou, API’s executive chairman, as well as all directors and certain other officers and major shareholders of API, have entered into lock-up agreements with BHP under which they will irrevocably vote common shares and options representing approximately 40 percent of API’s fully diluted outstanding common shares in favor of the transaction.

API has agreed not to solicit or initiate any discussion regarding any other business combination or sale of material assets. API has also granted BHP a right to match any superior proposal and will pay a termination fee of $12 million to BHP if the definitive agreement is terminated under certain circumstances, among them, API’s recommendation or approval of an acquisition proposal or its entry into an agreement with respect to a superior proposal.

“API’s board of directors has reviewed and explored a number of possible strategic options and it has concluded that BHP Billiton’s offer is in the best interests of API’s shareholders,” said Zhou. “API would like to thank all shareholders for their support. I am proud of what the API team has achieved and delighted to see such a successful outcome to the strategic review process we initiated last year.”

“Today’s announcement is consistent with BHP Billiton’s strategy of building a strong potash resource position,” said BHP Billiton Diamonds & Specialty Products President Graham Kerr. “We continue to pursue opportunities that fit within our portfolio and are aligned with our strategy of developing Tier 1, long life, low-cost, expandable assets. This acquisition fits well with our existing projects and land positions in the Saskatchewan potash basin.”

“I guess my comment on that would be that it gives everyone with a lottery ticket hope,” said PotashCorp President and CEO William Doyle, when asked about the BHP and API deal during an earnings teleconference last week. “All of us in the business scratch our heads with that one. But to talk about the big mining companies and Vale and BHP it’s pretty clear that a greenfield mine can not be justified economically by anyone at the current time.”

Doyle said that BHP has publicly said it would not make a final decision on a greenfield until November 2011. With that timing, the earliest BHP could be producing potash would be 2017.

Doyle said he believes that if BHP gets into potash it will not be just as a greenfield company, since the company is used to being among the top three in its commodity groups. He said a greenfield, even the BHP Jansen project at full production, would only put them at 8 million mt and make them the sixth or seventh largest player. He said he believes some of BHP’s recent public announcements have been designed to drive down the share prices of existing potash players to make the potential acquisition more attractive. “They’re not stupid, but neither are we.”

Doyle said the iron ore miners remind him a little of the oil industry’s movement into the fertilizer industry in the 1960s. “And they ended up losing billions of dollars, and they got out of the business just as fast as they got in. So a study of this history might be a worthwhile exercise for companies with no fertilizer expertise.

“And I guess my last comment would be that BHP doesn’t walk on water,” said Doyle. “They have to go through the same capital expenditures and time consuming route we would to bring out a greenfield property. At the end of the day, they’re going to have a much higher cost structure than we have. And I’m fully confident we will be able to compete against them or anyone else who decides they might want to enter the space. You know … no one should take us for granted. We can be very tough when we need to be.”

Bunge and Yara to sell Brazilian fert assets to Vale

Brazil, Featured, News

Bunge Ltd. said Jan. 27 that it has entered into a definitive agreement with Vale S.A. under which Vale will acquire Bunge’s fertilizer nutrients assets in Brazil, including its interest in Fertilizantes Fosfatados S.A., for $3.8 billion in cash. Net proceeds after taxes, transaction fees, and expenses will be approximately $3.5 billion.

Vale, a Brazil-based global mining company, will acquire Bunge’s 42.3 percent interest in Fosfertil, as well as Bunge’s wholly owned phosphate mines and related production facilities in Brazil. The total annual phosphate rock production capacity of Bunge’s nutrients assets and its share of Fosfertil is approximately 3 million mt. Other Bunge production assets include sulfuric acid at three locations, phosphoric acid, SSP plants at three locations, and feed phosphate at two locations.

Bunge will retain its retail fertilizer operations in Brazil and will enter into a supply agreement with Vale through 2012, with an option to extend it for one additional year. Bunge will also retain its fertilizer operations in Argentina, which include an SSP plant, nitrogen production, and NPK retail, and in the U.S., which includes wholesale, as well as its 50 percent stake in a joint venture with Office Cherifien des Phosphates in Morocco. The latter includes sulfuric acid, phos acid, and MAP/DAP/TSP under construction.

“This transaction is an opportunity to immediately realize the value of these assets at an attractive price,” said Alberto Weisser, Bunge chairman and CEO. “It allows us to redeploy capital to increase the scale of our global agribusiness and food & ingredients businesses, and to further expand into complementary value chains such as sugar. We see compelling opportunities for growth by building on our global footprint and leveraging our commercial, logistics and risk management capabilities across a larger product portfolio. We believe this approach will deliver greater shareholder value over the long-term.” Additionally, Bunge intends to use a portion of the proceeds to reduce outstanding debt.

“It’s an opportune time for Bunge to exit the upstream fertilizer business,” said Weisser. “To continue to grow it would have required significant capital that, in the face of uncertain international fertilizer price and local currency environments, we believe is better allocated to other opportunities. Additionally, large global mining companies are entering the industry and diversifying their portfolios. We are pleased that this business will join Vale, which shares with Bunge a long-term commitment to Brazil.”

In addition, Weisser told analysts in a conference call that significant low-cost production capacity is expected to come online in the next three years. He alluded to phosphate production in Saudi Arabia, Morocco, and elsewhere. Weisser added that the International Fertilizer Association has forecasted that global phosphate growth capacity could increase by as much as 30 percent by 2013. He said Brazil is a net importer and is a price taker, and that its Brazilian production business would be driven primarily by international prices.

Weisser said that over the next five years, Bunge would not have seen any positive cash flow out of this business. He said the mines are running at full capacity and would require investment to grow.

Weisser also acknowledged that there was tremendous pressure on Brazilian fertilizer companies to expand domestic fertilizer production. He said Bunge has an excellent relationship with the government and it is one of the largest exporters of food.

The transaction, which is subject to customary closing conditions, including the receipt of governmental approvals relating to certain mining concessions, is expected to close in the second quarter of 2010.

Of the $3.8 billion, Vale attributes $1.65 billion to Bunge’s phosphate rock mines and other phosphate assets, with the remaining $2.15 billion being Bunge’s stake in Fosfertil. Bunge is the second largest producer of phosphate fertilizer in Brazil, with a market share of 14 percent. Besides two phosphate mines, Bunge has plants turning out MAP, DAP, TSP, and SSP. The company fulfills 22 percent of the country’s phosphate requirements and 23.4 percent of its nitrogen.

Vale expects to see an increase in Brazilian fertilizer demand in the next 10 years. Brazil’s share of global phosphate usage currently sits at 9 percent. Vale expects that to increase to 13.5 percent by 2020. The purchase fits Vale’s overall strategy to become a global force in the fertilizer industry. In the next seven years, Vale wants to have 3.3 million mt/y and 10.7 million mt/y of potash. It already owns potash assets in Brazil, Argentina, and Canada; its Peruvian phosphate rock mine, which is under development, will have the capacity to produce 3.9 million mt/y.

Vale said that upon closing of the transaction with Bunge it would launch a mandatory offer to buy out the common shares held by minority shareholders of Fosfertil for 100 percent of the price per share attributed to Fosfertil shares. Fosfertil is the biggest producer of phosphate and nitrogen fertilizers in Brazil. The company owns three phosphate mines, two ammonia plants, and finished fertilizer plants with an upgrading capacity of 3.4 million tons phosphate rock and 0.6 million tons ammonia per year.

Yara International ASA said on Jan. 29 that it has agreed with Vale to sell its shares in Fosfertil in Brazil for $785 million. Yara will sell its stake in the Anitapolis phosphate rock project to Vale at the same time. Yara owns 15.5 percent of Fosfertil directly and indirectly following the acquisition of Fertibras in 2006.

The Anitapolis project, of which Yara owns 50 percent, is a project for developing a phosphate mine in Brazil. It was acquired when Yara bought Adubos Trevo in 2000. The project is still at an early stage, but significant development work has been done.

“Brazil remains an important growth market for fertilizer and Yara, but a minority position in Fosfertil is not giving the optimal operational integration with Yara’s fertilizer marketing in Brazil, a marketing activity that we will continue to develop. We see the offer from Vale as an attractive price for a non-integrated position,” says Jørgen Ole Haslestad, President and CEO of Yara International ASA.

The sale is conditional upon Bunge selling their shares in Fosfertil to Vale, subject to some precedent conditions.

The sale of the Fosfertil shares will give Yara a profit before tax of approximately US$550 million, and the close is expected in the second quarter of 2010. The sale of the Anitapolis shares will create a small profit.

Also, The Mosaic Co., a minority shareholder in Fosfertil, is reportedly in negotiations with Vale. Mosaic had not responded to inquiries at press time.

According to Vale, Fosfertil’s 2008 gross revenues were US$2.1 billion, while EBITDA was $761 million and net earnings were $436 million. For the first nine months of 2009, revenues were $987 million, with a negative EBITDA of $69 million and a loss of $36 million. As of Sept. 30, 2009, total debt was $66.6 million with cash and cash equivalents of $121.5 million, implying a negative debt of $54.9 million.

Bunge put it’s share of Fosfertil’s 2007-2009 average EBITDA at $188 million, with revenues of $646 million. It said the non-Fosfertil assets it is selling have an average EBITDA of $114 million and revenue of $810 million for the 2007-2009 period. These non-Fosfertil assets had a net loss of $52 million for the first nine months of 2009 and a negative EBITDA of $57 million. The company had net income of $209 million and EDITDA of $284 million in 2008.

Simplot, EPA agree on phosphate cleanup

News Briefs, Phosphate

The U.S. Environmental Protection Agency (EPA) said Jan 26 that it has modified a Record of Decision (ROD) with the J.R. Simplot Co. to reduce phosphorus pollution entering the Portneuf River near Simplot’s Don phosphate fertilizer plant west of Pocatello, to better protect groundwater. EPA estimates 1,200 pounds of phosphorus per day enter the river from the plant.

“As a result of this action, Simplot will make a major investment in reducing phosphorus leaving both the gypstack and the phosphoric acid production plant,” said Lori Cohen, acting director of EPA’s Superfund cleanup office in Seattle. “This is a big deal for protecting local health, the Portneuf River, and area groundwater.”

The ROD is a legal document that guides the cleanup of property or facilities that have been added to the federal Superfund site list or the National Priorities List. Under the amended ROD, Simplot must now make fundamental changes at its plant:

  • Identify phosphorus in groundwater as a “contaminant of concern.”
  • Characterize all contamination sources at or near the phosphoric acid plant.
  • Control all phosphorus contamination sources to the extent practical.
  • Install a high-density polyethylene (HDPE) liner atop the phosgypsum pile, known as the “gypstack,” to minimize process water infiltration through the gypstack and into groundwater.
  • Continue to develop, operate, and maintain a groundwater extraction system to address those areas where arsenic and phosphorus concentrations remain above cleanup standards or levels of concern.

Reducing the amount of phosphorus entering the Portneuf River is critically important because it acts as a fertilizer, causing rampant weed and algae growth during the warmer months, EPA says, adding that it robs the water of life-supporting oxygen needed by fish, insects, and other aquatic life.

Recent studies have revealed that more than 80 percent of the phosphorus entering the Portneuf River downstream of Batiste Road comes from the Simplot plant. High levels of phosphorus continue downstream to the American Falls Reservoir and along the Snake River.

Last summer, Simplot constructed a large decant pond to capture and store process water to block it from penetrating the gypsum stack. Simplot officials estimate the company has spent more than $6 million in the past four years on the project.

Cleaning up the groundwater beneath the Simplot plant is expected to improve water quality in the Portneuf River, the reservoir, and the Snake River, as well as help the Portneuf meet Idaho water quality standards for nutrients.

The changes to the Simplot ROD become effective immediately upon publication in the Federal Register. A consent decree, a formal legal document between Simplot and EPA, should be finalized in federal court in the next two or three months, officials said.

The Simplot plant is on the Eastern Michaud Flats Superfund site, encompassing 2,475 acres. The adjacent FMC elemental phosphorus plant that closed in December 2001 and was later demolished was also located there. Both plants were constructed in the 1940s. The FMC property was 1,450 acres. Simplot’s acreage totals 1,025. EPA anticipates a similar plan for the FMC site by this summer.

While the Simplot plant is not located on the Fort Hall Reservation, the Portneuf River flows through the property’s northeast section and north into “the Bottoms,” where most Shoshone-Bannock conduct traditional and ceremonial activities, including fishing and the gathering of native plants.

Canpotex to meet with Chinese next week, will not do $350/mt CFR, says Doyle

News

Canpotex Ltd., the export marketing arm of the Saskatchewan potash producers, will meet with the Chinese next week, according to PotashCorp President and CEO William Doyle, and it will not agree to $350/mt CFR, as has been done by Belarusian Potash Co. and Israel Chemicals Ltd. Other buyers have been paying $385-$400/mt CFR.

Doyle, speaking to analysts about PotashCorp earnings, said the $350/mt CFR for the whole year would have been a mistake for Canpotex, and he feels the other two suppliers will feel the same way come the second half. Doyle said that he believes the Chinese will move to quarterly contracts. “I don’t know what kind of contract it is when the customer doesn’t take anything for the whole year…That’s zero performance. That’s not much of a contract.” He called the annual contract “nonsensical,” leaving everybody exhausted – and stupidly so in terms of what it means for a serious issue like global food production.

He said it may be the second half before Canpotex concludes a deal with China. “We did learn to live without China last year,” said Doyle. “That was instructive.” He noted that so far only BPC and ICL have come forward, and that China will also need potash from other international suppliers.

“We do see our issues with China being short term in nature,” said Doyle. “China’s potash consumption will start to recover this year, but it will grow considerably in 2011 and beyond. China will be at least 75 percent dependent on imports of potash going forward, and will need our new capacity to fill their needs in the not-too-distant future.” He cited International Plant Nutrition Institute forecasts that China will go from 10 million mt to some 26 million mt in 15 years.

As for BPC, which has been leading the way on negotiating with China in recent years, Doyle said they’ve proved to be a bit of a panic seller, selling too high in 2008 and too low in these recent negotiations with China.

Doyle said inventory levels of other major buyers – Brazil and India – are low, and he expects India may begin new negotiations as early as March.

Potash sales rebounding after historic lows in 2009, says PotashCorp

News, Potash

Company potash sales volumes in North America for the first three weeks of 2010 were better than the North American sales for all of January-August of 2009, PotashCorp President and CEO William Doyle told analysts last week. 2010 potash sales volumes were the lowest since the company was first publicly traded in 1989.

While the company saw improved potash sales volumes in the fourth quarter ending Dec. 31, 2009, it wasn’t enough to keep PotashCorp from a 69 percent drop in net income, to $243.6 million ($.80 per diluted share) on sales of $1.1 billion, compared to the year-ago $788 million ($2.56 per share) and $1.87 billion, respectively.

Full-year earnings were $987.8 million ($3.25 per share) on sales of $3.98 billion, down from the prior year’s $3.49 billion ($11.01 per share) and $9.45 billion, respectively.

Potash is the company’s core nutrient, contributing 74 percent of the $279.6 million gross margin generated in the fourth quarter and 71 percent of the $1 billion for the full year. Fourth-quarter potash gross margin was $206.2 million on sales of $412.5 million, versus the year-ago $744.8 million and $932.2 million, respectively. Full-year gross margin was $730.4 million on sales of $1.3 billion, compared to the year-ago $3.06 billion and $4.07 billion, respectively.

Nitrogen gross margins were up in the fourth quarter at $43.1 million on sales of $324.2 million, compared to the year-ago $17.9 million and $433.1 million. While realized nitrogen prices were down 34 percent from the year-ago quarter sales, volumes were up 7 percent. Full-year margins were down, however, at $191.8 million on sales of $1.29 billion, versus the year-ago $737.4 million and $2.5 billion. Full-year volumes were flat versus 2008.

PotashCorp’s Trinidad nitrogen operations generated $27.1 million in fourth-quarter gross margin, and $105.3 million for all of 2009.

PotashCorp reported that gas costs, including hedges, were $4.55/mmBtu for the fourth quarter and $3.86/mmBtu for the year, some 26 percent and 49 percent lower than the year-ago periods.

Fourth-quarter phosphate margins were $30.3 million on sales of $362.4 million, compared to the year-ago $110.4 million and $505.3 million. Full-year margins were $103.8 million on sales of $1.37 billion, versus the year-ago $1.11 million and $2.88 billion.

PotashCorp is projecting the 2010 potash gross margin to be in the range of $1.4-$1.8 billion and total shipments of 7-8 million mt. It expects increased demand and higher prices to push combined nitrogen and phosphate gross margins to $400-$500 million. The company projects 2010 net income per share of $4.00-$5.00, including $.70-$1.00 in the first quarter.

Potash Sales Volumes 000 mt 4Q-09 4Q-08 YR-09 YR-08
North America 494 379 1,093 2,962
Offshore 612 1,058 1,895 5,585
Totals 1,106 1,437 2,988 8,547
Potash Avg Price $/mt
North America 395.54 740.48 463.74 441.38
Offshore 287.63 583.27 368.84 452.43
Averages 335.83 624.70 403.56 448.60
Phosphate Sales Volumes 000 mt 4Q-09 4Q-08 YR-09 YR-08
Fertilizer-Liquid 263 173 791 893
Fertilizer-Dry 305 80 1,182 1,069
Feed 135 102 531 654
Industrial 151 157 551 706
Totals 854 512 3,055 3,322
Phosphate Avg Price $/mt
Fertilizer-Liquid 302.22 1,016.58 297.53 823.17
Fertilizer-Dry 300.95 1,041.79 299.51 932.44
Feed 434.50 948.20 489.78 753.90
Industrial 659.90 744.85 701.62 666.97
Averages 386.23 923.51 404.60 811.50
Nitrogen Sales Volumes 000 mt 4Q-09 4Q-08 YR-09 YR-08
Ammonia 354 395 1,740 1,794
Urea 341 279 1,433 1,186
UAN/Other 437 381 1,794 2,062
Totals 1,132 1,055 4,967 5,042
Nitrogen Avg Price $/mt
Ammonia 300.27 447.13 244.43 557.05
Urea 297.25 374.54 290.64 533.77
UAN/Other 152.00 283.95 158.50 280.34
Averages 242.14 368.95 226.73 438.43

* Totals are manufactured product.

Helena acquires Domestic Seed fertilizer division

News Briefs

Madison, S.D.-Helena Chemical Co. has acquired the fertilizer and chemical division of Domestic Seed and Supply, which company officials say fits nicely with plans for growing the company’s north business unit. “It just adds to our retail presence in the north where we’re a pretty large wholesale chemical distributor and helps us to continue to grow that business,” Randy Parman, business unit vice president, told Green Markets. Parman said there are no plans right now for “brick and mortar expansion” in Madison, but he wouldn’t rule it out for the future. “The main thing we’re looking at is expanding services to the customer base. There are no plans for expansion this point, but we would look at it eventually.” Helena’s north business unit already operates 60 retail sites and another 20 wholesale locations in the Colorado-Ohio business area, which includes the eastern third of the Dakotas. Helena is not actually adding a division in the regular sense, but a single Domestic Seed location that currently employs 10 full-time and about 17 part-time workers. Branch manager for the fertilizer division Jody Bergheim has agreed to stay on, as have all the other employees. Ben Fox, a salesman who said he looks forward to working with Helena, described the Madison operation as a typical fertilizer and chemicals facility handling mostly bulk and application of dry and liquid products. These products include urea, DAP, and potash in an area that spreads over a 40-mile radius, taking in Sioux Falls, Mitchell, and Brookings. “Helena will bring efficiency to the agronomy department that will be beneficial to customers,” offered Terry Schultz, president of Domestic Seed and Supply. “This will allow us to excel in seed research and spend more time expanding our Mustang Seed business.” A special meeting was scheduled for last week at the Madison VFW to introduce Domestic Seed customers to Helena and provide information about Helena’s approach to agriculture inputs.

Prairie Creek details new fertilizer division

News Briefs

Elwood, Ill.-Prairie Creek Grain Co., Elwood, Ill., some 35 miles south of Chicago, says its new fertilizer division will be called Prairie Creek Terminals Services. The liquid terminal has 14,000 st of UAN 32 storage and a dry blending plant with three custom bagging lines. The company said it is currently looking for new bagging opportunities to bag blends, ice melt products, SOP, potash, and urea. Bob Pound, who has been involved in the fertilizer business for over 30 years, will head up the wholesale entity as vice president of the company. He was most recently with Timac Agro USA, and he was vice president of agronomy for CPI Coop in Burlington, Wisc. Pound has over 14 years of management experience in the cooperative system. He can be reached at his office number, 815-433-6604; his cell at 815-931-5632; or via e-mail at bpound@pcgrain.com.

Viterra to build new center in Alberta

News Briefs

Regina-Viterra Inc. said Jan. 28 that it plans to build a full-service retail center in Sexsmith, Alberta. The facility will offer a host of Viterra products and services to area customers, including proprietary seed, fertilizer, crop protection products, ag equipment, financing, and agronomic advice. It will be located on the same site as the high-throughput elevator that the company is currently constructing. “Our retail centre at Sexsmith will enable customers to access Viterra’s full suite of products and services, in addition to grain handling and marketing, at one convenient location,” said Doug Wonnacott, Viterra’s Agri-products senior vice president. “This decision represents our ongoing commitment to enhance our service delivery model to benefit western Canadian farmers, and illustrates our confidence in what is becoming an increasingly important agricultural region of the Prairies.” The facility, approximately 25 kilometers north of Grand Prairie, will include a high-throughput fertilizer plant, along with a 20,000 square foot warehouse. Construction is expected to begin in the spring and is scheduled for completion in fall 2010. The company’s new grain elevator is slated to open ahead of schedule this June.

Ammonia eyed as energy for Hanford cleanup

Ammonia, News Briefs

Richland, Wash.-It’s still too early to predict the outcome, but anhydrous ammonia produced from wind and water onsite could be supplying some of the energy needed to vitrify millions of gallons of high-level nuclear wastes. Most of the material is stored in about 200 underground tanks at the former Hanford nuclear plant. Bechtel National is currently working on the project, which is described as the largest federal construction project in the U.S. As of last fall, Bechtel reported that construction is 50 percent complete. The $12.2 billion nuclear waste cleanup project is scheduled to begin operation in 2019. It will mix high-level nuclear wastes with glass at extremely high temperatures and dispose of it in solid waste logs in a deep geological depository. The vitrification plant will require huge amounts of energy, supplied mostly by a steam plant designed to use 45,000 gallons of diesel and leave a high carbon footprint, explained Gary Petersen, vice president of Hanford programs for the Tri-City Development Council. “We’re looking for alternatives such as natural gas, biofuels and anhydrous ammonia which could be used to offset steam for the fuel plant and potentially some of the power itself,” Petersen told Green Markets. That’s led him to NHThree LLC, also located in the Richland area, which Peterson reported is “developing a proposal along those lines.” NHThree CEO Dr. John Holbrook reported that the technology is still in the development stage, and that the setting is probably ideal, with plenty of wind and water available. “Our energy consumption would be much more favorable, but all we have been able to do so far is to produce ammonia in the laboratory,” Holbrook conceded. He said he didn’t know if NHThree would be submitting a proposal.