All posts by traceybg@gmail.com

CF reports substantial FTC compliance, extends offer for Terra through August 7

CF Industries Holdings Inc. reports that on July 6, 2009, it filed a certification with the U.S. Federal Trade Commission (FTC) that it has substantially complied with the FTC’s request for additional information (Second Request), which CF received on June 3, 2009, in connection with its proposed business combination with Terra Industries Inc. Pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), absent the FTC challenging CF’s substantial compliance with the Second Request, the premerger waiting period will expire at 11:59 p.m., Eastern time, Aug. 5, 2009.

“We are pleased with the steady progress we have made in obtaining regulatory clearance of our proposed business combination with Terra,” said Stephen Wilson, CF chairman, president, and CEO.

CF had said earlier that the FTC was narrowly focused on the distribution of ammonia for nonagricultural use in certain limited circumstances, a business that represented less than 1 percent of CF’s 2008 revenues (GM June 22, p. 1). Unlike with Terra, CF maintains there are likely to be considerable regulatory issues with an Agrium acquisition of CF, an assertion Agrium disputes.

CF noted that effective May 27, 2009, Agrium Inc. withdrew its notice under the HSR Act with respect to its offer for CF for the second consecutive time and, nearly six weeks later, has still not re-filed its notice with the FTC.

CF also announced July 6 that it has extended the expiration date of its exchange offer for all of the outstanding shares of Terra common stock until 5:00 p.m., Eastern time, Friday, Aug. 7, 2009, unless further extended. The offer had been scheduled to expire at 5:00 p.m., Eastern time, on Friday, July 10, 2009. All other terms and conditions of the exchange offer remain unchanged. As of the close of business on July 3, 2009, a total of 2,860,681 shares of Terra common stock had been tendered into the exchange offer. There are about 100 million Terra shares outstanding.

Industry mourns death of Jack Eberspacher

Jack Eberspacher, 55, President and CEO of the Agricultural Retailers Association, died peacefully in his sleep on July 5 at the Inova Cameron Glen Care Center in Reston, Va. Eberspacher was on indefinite medical leave from ARA after a diagnosis of cancer in late April.

“ARA and the industry lost a dynamic leader and true visionary,” said ARA Chairman Ken Manning of Wilbur-Ellis Co. “Jack worked tirelessly to build this organization into the strong voice for agricultural retailers and distributors we have today in the nation’s Capitol. He always stressed the importance of ARA listening to its members and providing value to those members. Due to his efforts, we have an experienced and very capable team at ARA who are committed to seeing Jack’s and the board of directors’ vision for the organization fulfilled. ARA has a solid foundation in place that will only get stronger through the active involvement of its members and the industry.”

Eberspacher was appointed president of ARA in July 2001 by the association’s board. He grew the association by more than 100 percent, increasing the annual association dues revenue from $567,000 to more than $1.3 million. Prior to joining ARA, Eberspacher served as CEO of the National Association of Wheat Growers (NAWG), where his leadership guided the organization from a negative $200,000 in net earnings to a positive $80,000 in two-and-a-half years.

Before NAWG, Eberspacher served as the CEO of the National Grain Sorghum Producers Association, now known as the National Sorghum Producers (NSP), located in Lubbock, Texas. He grew that association by 300 percent and is credited with developing balanced association programs on policy, plant science, and utilization, and for placing the association on the national legislative and regulatory scene.

“Jack was our colleague and dear friend,” said Tim Lust, current NSP CEO. “His leadership carried this organization both through rough patches and tremendous growth. He cast a remarkable vision for NSP and never let the organization stray from its farmer members and the basics.”

In February 2002, Eberspacher was the only commodity leader invited to address the National Governors Conference, where he discussed the state of the agriculture economy and the importance of the 2002 farm bill. He was also appointed to the Bush/Cheney Agricultural Transition Team.

Eberspacher was born in Nebraska and received a bachelor’s degree in animal science from the University of Nebraska. He also completed coursework toward a master’s degree in business administration at Texas Tech University. He is survived by his wife, Jinger, and two children, Sam, a sophomore at the University of Virginia, and Maggie, a high school senior.

A memorial service was scheduled for Saturday, July 11, at 2:30 p.m. at the Vienna Presbyterian Church, 124 Park Street, NE, in Vienna, Va., with a reception immediately following the service.

An educational trust has been established for Sam and Maggie Eberspacher. Checks can be made to the “Sam and Maggie Eberspacher Educational Trust,” and can be addressed to Bank of America, N.A., c/o Carolyn F. Grant Suttie, 8300 Greensboro Drive, Suite 500, McLean, VA 22102.

In a July 9 letter to ARA members, former ARA Chairmen John Hester, Pete Romano, and Wendell Stratton joined former ARA board member Neil Strong in asking those interested to consider donations of $250-$1,000 for individual members and $2,000-$10,000 for member companies. “Knowing that Jack has given so much to ARA and the greater agricultural industry over his career, now we have the opportunity to give back to his family,” the letter stated. “College tuition and expenses have risen dramatically over the last few years. Our effort from ag retailers, combined with the effort of the wheat and sorghum growers, should help meet these education costs.”

ARA has not yet named a successor to Eberspacher, but a company spokesperson said it expects to make an announcement by the middle of August. For now, organization duties are being shared by staff, with no official changes to job titles.

Ag business pulls down CHS results

A huge decline in CHS Inc.’s ag business segment, which includes fertilizer, was the major reason for reduced third-quarter and nine-month results for the company. Ag business income before taxes was $23.8 million on sales of $4.4 billion for the third quarter ending May 31, 2009, versus the year-ago $179.9 million and $6 billion. During fiscal 2008, CHS recorded a gain of $91.7 million on the company’s sale of stock in CF Industries Holdings Inc.

Company-wide, CHS reported net earnings of $64.6 million on sales of $6.2 billion for the third quarter ending May 31, 2009, versus the year-ago $188.7 million and $9.3 billion, respectively.

Wholesale crop nutrient earnings were off $80.4 million during the third quarter. Revenues were $675.9 million versus the year-ago $935.1 million. Of the $259.2 million decrease (28 percent), $22.5 million was due to decreased average fertilizer selling prices and $236.7 million was attributable to a 25 percent drop in volumes. The drop was blamed on a late planting season caused by excessive moisture in late April. The average sales price of all fertilizers sold reflected a decrease of $15/st (3 percent) over the year-ago period.

CHS said wholesale crop nutrients cost of goods for the third quarter was $682.3 million, versus the year-ago $866.8 million. The company made a lower-of-cost adjustment of $83 million in fiscal 2009, of which $8.2 million remained at the end of the quarter.

Non-grain and non-wholesale crop nutrients had revenues of $703.5 million from the year-ago $729.3 million. The decrease was attributed to the country operations business of retail energy and feed products, partially offset by increased revenues of retail agronomy products. These prices averaged a bit higher than the prior year because contracts entered into by producers earlier in the year, despite the fact that spot prices for most agronomy products this spring, were considerably lower than year-ago levels.

CHS said third-quarter earnings were led by the company’s energy segment, with strong performance from its refined fuels and propane businesses. Third-quarter energy income was $38.8 million, versus the year-ago $12.5 million. Nine-month energy income was $298.7 million, up from the year-ago $165.7 million.

The CHS processing segment results reflected reduced oilseed crushing margins, offset by strong earnings from both the company’s ownership of Ventura Foods, LLC, a vegetable oil-based food processor and manufacturer, and Horizon Milling, LLC, a flour milling joint venture. During the third quarter, CHS wrote off the remaining $3.6 million of its ownership in ethanol producer VeraSun Corp., bringing the loss recorded on this investment in fiscal 2009 to $74.3 million.

Third-quarter processing income was off at $14.2 million from the year-ago $17.1 million, while nine-month results were in the loss column at $29.3 million versus the year-ago income of $65.3 million.

The weak economy also contributed to lower earnings for the company’s insurance, risk management, and financial services businesses, recorded under corporate and other segments.

CHS nine-month net earnings were $284.1 million on sales of $19.1 billion, versus the year-ago $657.6 million and $22.8 billion, respectively.

Nine-month ag income was $56.5 million on sales of $12.76 billion, versus the year-ago $504.6 million and $14.1 billion, respectively.

Wholesale crop nutrient earnings were off $174.8 million during the nine-month period. Revenues were $1.6 billion, down from the year-ago $1.9 billion. CHS said there was a $525.4 million drop in volumes, partially offset by $294.2 million due to increased average fertilizer prices during the nine-month period. The average sales price of all fertilizers sold reflected a $87/st increase over the year-ago period. Overall volumes were off 28 percent for the nine-month period. Cost of goods sold was $1.7 billion, versus the year-ago $1.8 billion.

Non-grain and non-wholesale crop nutrient revenues were up, at $1.4 billion compared to the year-ago $1.32 billion. This reflected increased revenues in the country operations business of retail crop nutrients, crop protection, and feed products, partially offset by decreased prices in retail energy.

Southern States loses blending facility in fire

Lumberton, N.C.-A Southern States Cooperative corporate team was on the scene early last week along with local investigators looking into the cause of the fire that destroyed the blending facility of the company’s operations here. That part of Southern States was completely destroyed early on June 28, but no one was injured since the plant was closed down for the weekend. Some 22 emergency services agencies responded from Robeson and Bladen counties. Lumberton Fire Chief Mike Cox told the local press that none of these crews were injured, but two firefighters suffered from heat exhaustion. Cox said firefighters had to withhold water and let the building burn because the chemicals inside would have caused an additional hazard. At one point, bright orange flames and thick black smoke could be seen reaching skyward for miles. But the fire never threatened nearby homes or businesses, and there was no ordered evacuation. Cox said the state Division of Air Quality had checked the area surrounding the plant and nearby neighborhoods and gave it a clean bill of health, and no water contamination was detected in hydrology testing. “It was a total loss,” according to Plant Superintendent Robbi Collins. “There is nothing left in the plant that can be used.” Collins said, however, that with some quick rearranging normal operations are continuing. “We have other plants here that are being used. Fortunately we are out of the blending season and we have two other warehouses that we can use for shipping.” He said the biggest loss was the bagging capability, but that part of the operation is being shifted to Southern States’s Chesapeake facility. Fire investigators started probing the ruins to determine the cause of the blaze, and corporate representatives arrived to work with insurers and help plan for clearing away the fire debris.

22-car derailment spills potash in Indiana

Sullivan, Ind.-Indiana State Police are still investigating the possibility that tampering led to the derailment of 22 of 70 top-loading hopper cars filled with potash fertilizer last Wednesday at the end of a spur line near here. One of the investigators, Sgt. Joe Watts, told Green Markets that “there isn’t any indication of the cause at this point, but we’re still looking at that probability.” Watts said he expects the investigation to be concluded by mid-week. He said the cars contained potash owned by several different companies, and he wasn’t certain of the amount that could be salvaged by clean-up crews. The cars, coupled together and parked for long-term storage by the Indiana Rail Road Co., for some reason left this spot and traveled southwest nearly four miles to the end of the spur line in eastern Sullivan County. At that point the lead car struck a metal barrier at the end of the track, causing 22 of the cars to derail and overturn. The Indiana Dept. of Environmental Management made an initial assessment at the scene and police and rail officials reported there was no reason to believe the spilled fertilizer would cause health concerns. Watts said the cars had been parked on the unused railroad spur of the former No. 3 Kendall Mine since June 12. Railroad officials have offered a $20,000 reward for the arrest and conviction of those responsible if the derailment proves to be a criminal act.

Agriliance results off in 3Q, nine months

St. Paul-Agriliance LLC reported a net gain of $2.96 million on sales of $342.4 million for the third quarter ending May 31, 2009, according to one of its parents, CHS Inc. For the year-ago quarter, the net gain was $20.9 million on sales of $389.1 million. Agriliance had a nine-month net loss of $39.2 million on sales of $542 million, versus the year-ago loss of $26.3 million on sales of $787.4 million. The remaining Agriliance, consisting of a chain of retail outlets, is owned by CHS and Land O’Lakes Inc.

Fertilizer scheme results in another guilty plea

St. Louis, Mo.-The founder and chairman of Earthly Mineral Solutions Inc. (EMS) has pleaded guilty to fraud charges for a scheme to sell 250 investors $18 million in mining claims that supposedly contained rich deposits of a fertilizer material in the desert south of Las Vegas. According to Acting U.S. Attorney Michael Reap, Roy Higgs, 67, of Henderson, Nev., pleaded guilty to one felony count of conspiracy to commit mail fraud and now faces a maximum penalty of five years in prison and fines up to $250,000 when he is sentenced Sept. 14. Co-defendant Frank Schwartz, 45, of Los Angeles, was sentenced in April to three years imprisonment for his role in EMS after pleading guilty in January to working for the company and failing to report its fraudulent activities to authorities. EMS is a Nevada corporation and from 2004 through 2006 sold hundreds of investors across the country approximately $18 million worth of fertilizer mining claims. Higgs, Schwartz, EMS, and the company’s former general counsel, Rick Lawton, also face a civil enforcement action brought by the Securities and Exchange Commission. That case is pending in Las Vegas and has been stayed pending the outcome of the St. Louis case. As part of his guilty plea, Higgs agreed to resolve the SEC case. In all, Reap reported, more than 250 investors have lost principle and interest payments they were promised as part of their agreement to invest in EMS’s mining claims.

Viterra gives crop, ABB update

Calgary-Viterra Inc. said July 8 that it expects average grain marketings in the 2009/10 crop year based on current crop conditions and a significant carryout of production from 2008/09. Its current estimates assume continued timely rains and a frost-free fall harvest period. Viterra anticipates average yields in most areas of Western Canada this year. The company noted that crop development was aided by precipitation that was received over most of the prairie region this week. However, an area of west central Saskatchewan and east central Alberta is expected to experience significantly reduced yields due to dry conditions. Viterra concurs with recent industry estimates of production of the six major grains in Western Canada in the 44-46 million mt range, slightly below the ten-year average of 48 million mt. However, on-farm carryout from a record crop in 2008 is expected to be 7 million mt, up from 3 million mt last year. As a result, it is the company’s current expectation that deliveries (6 major grains) into the western Canadian grain handling system for 2009/10 will be 30-31 million mt, consistent with the 10-year average. “It is important to keep in mind that Western Canada is an extremely large and diverse producing region. While an area experiencing drought conditions has received significant media attention, overall crop prospects are in the normal range,” said Mayo Schmidt, Viterra president and CEO. Viterra also confirmed that its acquisition of ABB Grain Ltd. (ABB) remains on track, following a revision by ABB to their earnings guidance for their fiscal 2009. “Our offer was not based on one year of earnings, but rather the long-term cycle of earnings beginning in 2010 and beyond,” Schmidt said. “The strategic rationale remains compelling. In addition, crop prospects in South Australia have been supported by good rainfall and growing conditions. As such, Viterra remains committed to its acquisition of ABB and strongly believes that the combination of ABB and Viterra will create a global leader in agri-business that will deliver significant benefits to the shareholders of both companies.” Last week ABB downgraded its net profit forecast for the year ending Sept. 30, 2009, to A$43-$53 million, down from projections given in May of A$53-$63 million. ABB cited lower demand in both the malt and ag input industries.

K+S completes nitrogen unit merger

Kassel, Germany-Effective July 1, 2009, K+S Group merged the business activities of fertiva GmbH with parts of COMPO’s professional fertilizer business in a new company, K+S Nitrogen. K+S announced plans for the merger last year (GM July 14, 2008). The company says this bundling of activities forms the basis for further long-term growth. “K+S Nitrogen will be a leading provider of nitrogenous fertilizers with a high level of competence in all areas ?Çô from research and product development through logistics to sales,” says Rudolf Graf von Plettenberg, CEO of K+S Nitrogen GmbH. The product portfolio, consisting of complex fertilizers (Nitrophoska®), straight nitrogen fertilizers (KAS), and high-quality nitrogen sulfur fertilizers, is being supplemented by two further product groups ?Çô the low-chloride Nitrophoska brands and N-stabilized mineral fertilizers (ENTEC). The cultivation of agricultural crops, as well as vegetables, fruit, and grapes will now be covered. “With this product portfolio, we will meet increasing demands for a comprehensive product program ranging from standard to high-end fertilizers,” says Thorsten Wendt, head of marketing. Worldwide, the company sells a total volume of more than 4.7 million mt of fertilizer. The company is planning to earn almost 20 percent of its revenue on its domestic markets in Germany. K+S Nitrogen will achieve just under 55 percent of its turnover in other European countries. The company says it will focus on distributors in powerful sales markets that are expected to prove profitable in the medium term, including Spain, Italy, and Greece. K+S will continue to cooperate intensively with BASF SE. BASF produces fertilizers exclusively for sale via K+S Nitrogen. The production volumes and product mix are controlled by K+S Nitrogen in close consultation with BASF SE. Furthermore, K+S Nitrogen also markets products from other reputable European manufacturers. About a quarter of the company’s turnover will come from markets outside Europe. K+S Nitrogen will employ 150, with about half of those working at the company headquarters in Mannheim.

Perdaman taps technologies for giant urea plant

Perth-Perdaman Chemicals and Fertilisers has selected its coal gasification, ammonia, and urea melt and granulation technologies for the A$3.5 billion Collie urea project in Western Australia. Shell will provide the core coal gasification and gas treatment technology. Danish company Haldor Topsoe A/S will provide the ammonia synthesis technology. The single-line ammonia capacity is expected to be more than 3,500 mt/d. The Netherlands-based Stamicarbon BV will provide its Urea 2000 plusTM melt technology and fluid bed granulation technology. Urea production is expected to be 2 million mt/y. Perdaman had already signed on Korea’s Samsung Engineering and Indonesia’s Inti Karya Persada Tehnik for the engineering, procurement, and construction (GM June 15, 2009). Perdaman hopes to begin construction in 2010 and operations in 2013, with A$850 million in export earnings.