All posts by traceybg@gmail.com
Agrium extends UAP tender offer, seeks to stave off delay of closing
Agrium Inc. is moving to stave off a possible delay in its final acquisition of UAP Holding Corp. Rather than waiting for anticipated questions from regulators, Agrium has been withdrawing and refiling its documents in order to give regulators more time. Agrium said Jan. 18 that it has extended its previously announced tender offer for all of the common stock of UAP Holding Corp. until 12:00 midnight, New York City time, on Monday, Feb. 25, 2008. The tender offer was previously set to expire at midnight, New York City time, on Thursday, Jan. 17, 2008.
Agrium said it extended the offer because all of the conditions to completion of the offer have not yet been satisfied. In particular, the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act has not yet expired or been terminated, and an advance ruling certificate or a “no-action” letter under the Competition Act (Canada) has not yet been obtained.
Agrium explained on Jan. 14 that in order to allow more time for the Federal Trade Commission (FTC) to review the proposed acquisition of UAP, Agrium withdrew its notification and report form with plans to re-file within 30 days. Agrium originally filed its notification and report form under the HSR Act on Dec. 10, 2007 and re-filed on Dec. 28, 2007. The re-filing of the notification and report form under the HSR Act was followed by informal discussions with staff of the FTC, during which the staff informally requested additional information about the businesses of Agrium and UAP.
Agrium said the current withdrawal and re-filing of the notification and report form will provide the FTC with more time to review the information submitted by Agrium and UAP, without requiring a Request for Additional Information or “second request.” If a second request were issued, the closing of the acquisition of UAP would not be expected until the summer of 2008. Agrium remains hopeful that the deal can still close in the first quarter. Agrium said there is still no assurance that the FTC will not issue a second request. Agrium added that it remains committed to working cooperatively with the FTC as it conducts its review of the proposed acquisition, and remains confident of a successful close to the transaction.
As of Jan. 17, Agrium said 35.8 million shares, or over 85 percent of the UAP shares, have been tendered.
To date, Agrium said there have been no rumblings of concerns from Canadian antitrust authorities. Agrium noted that UAP owns a few crop protection warehouses in Canada, and neither company has retail outlets. By comparison, in the U.S., both companies have a multitude of assets for regulators to ponder.
Fire destroys Agrium facility
An Agrium Inc. warehouse in Lynchburg, Va., was destroyed by fire Sunday, Jan. 13. The warehouse, a bagging and blending facility with a dry capacity of 9,000 st, was part of the Agrium Lynchburg Distribution Terminal. Built in 1905 and upgraded in the 1970s, it was a part of the Royster-Clark acquisition.
Agrium said some 3,500 st of material was in the warehouse at the time, and that some of it is salvageable. A spokesperson said as a blending facility it would have included all three major nutrients. No hazardous materials were involved, and there were no fears of an explosion. Agrium said the warehouse, while destroyed, was just one of seven buildings at the site.
Agrium gave no estimate of the cost of the damage, though the local media came up with a price tag of $2 million. An Agrium spokesman said that was likely putting a price tag of $400/st per ton on the blended fertilizer; as noted, some of that is expected to be salvaged.
The fire was still smoldering at mid-week. The National Response Team from the Bureau of Alcohol, Tobacco and Firearms was called in to assist local authorities in determining a cause for the blaze. Wintry weather across the region was expected to slow down the investigation and cleanup. State and local authorities have been monitoring the air and a local stream.
Martin plans new sulfuric acid plant; company raises money for organic growth
Martin Resource Management Corp., Kilgore, Texas, said Jan. 11 that its board of directors has approved the construction of a new sulfuric acid plant in Beaumont, Texas. The new plant will have a total capacity of 150,000 tons per year and is scheduled for completion in late 2009. This plant will be identical in size to the sulfuric acid plant owned and operated by Martin Midstream Partners (MMLP) at its Plainview, Texas facility.
Martin says the new plant will be the only one on the U.S. Gulf Coast dedicated solely to serving the chemical industrial market, and will have no “in-house” captive requirements for production. All production output will be available for external consumption. Martin says advantages at its Beaumont facility include existing sulfur supply infrastructure, on-site sulfuric acid storage, and transportation services, including access to the facility by ship, barge, rail, and truck.
Martin says its combination of local and international sulfuric acid supply has served as a critical source of raw material for U.S. Gulf Coast consumers for over ten years. It said customers have come to rely on the service and dependability afforded by Martin’s dedicated system of trucks and barges, combined with its 50,000 tons of sulfuric acid storage in Beaumont. This investment is intended to further strengthen Martin’s role in the industrial supply chain as the premier, value-added provider of high-quality, virgin sulfuric acid. Preliminary discussions have been held with several potential subscribers, and it is anticipated the plant output will be fully subscribed well before plant completion.
In other news, earlier in the month, MMLP announced a new amended credit agreement that increases its revolver commitments to $195 million from $120 million. MMLP said the additional $75 million is intended to provide MMLP with the capital needed to execute its $100 million organic growth plan in 2008.
The 2008 organic growth budget of $100 million includes approximately $50 million for MMLP’s Terminalling & Storage segment, $40 million for its Marine Transportation segment, and $10 million for the Natural Gas Services segment. Major capital projects included in the 2008 budget include an expansion of the company’s Mont Belvieu railrack facility and new construction of marine equipment, including six inland double-hull tank barges, one offshore double-hull tank barge, and three new 2,400 horsepower inland pushboats. Other projects in the 2008 budget include various upgrades and expansions of existing assets in MMLP’s Terminalling & Storage, Marine Transportation, and Natural Gas Services segments.
In December, MMLP filed a shelf registration statement with the Securities Exchange Commission covering the offer and sale from time to time, at its discretion and as its business circumstances and market conditions warrant, of up to $400 million of its common units, its debt securities, and/or the debt securities of its operating subsidiary.
Yara closes Trinidad ammonia plants
Point Lisas, Trinidad-Yara International ASA closed its Trinidad ammonia plants at midnight Jan. 17 due to a pending strike by workers. The plants produce approximately 1.3 million mt/y of ammonia. CF Industries Inc., a Florida DAP producer and user of Yara ammonia, told Green Markets that it should have enough ammonia on hand to continue production well into February. The Mosaic Co., another Florida DAP producer, told Green Markets that it is still assessing the situation and is in talks with Yara. Mosaic may be okay for the near term, as it has recently acquired new ammonia cargoes from Nitrochem. The news is expected to immediately add a bump to the U.S. ammonia import market. Tampa prices had just moved up to $505/mt DEL from $460/mt DEL prior to the news (see Market Report).
Rentech says it is not for sale
Los Angeles-Rentech Inc. said Jan. 11 that it has advised Sherwood Investments that the Rentech board of directors has unanimously concluded that this is not the appropriate time to sell the company. As a result, Rentech said its board is not at this time prepared to engage in negotiations with Sherwood or any other party regarding a possible sale transaction. In reaching this determination, Rentech said the board carefully considered Sherwood’s letters in several recent meetings. In the course of that consideration, the board sought the advice of its professional advisors, and the independent directors also met in executive session without management present. During this process the board considered, among other things, its view of the future prospects of the company and the potential upside for stockholders to be achieved upon proving the commercial viability of Rentech’s technology. The board unanimously concluded that Rentech’s policy is to execute on its business plan and not to pursue sale proposals at this time. In addition to Sherwood, Pentagon Capital Investments PLC, another Rentech shareholder, has also indicated that Rentech should consider a sale (GM Dec. 17, 2007, p. 1).
CHS reports $300.9 M 1Q income
St. Paul, Minn.-CHS Inc. reported record earnings of $300.9 million on sales of $6.5 billion for the first quarter ending Nov. 30, 2007. This compares to the year-ago $136.4 million and $3.8 billion, respectively. The increase was driven by higher prices for grain and energy, along with the inclusion for the first time of crop nutrient sales, which previously were part of the joint venture Agriliance LLC. Ag business earnings were $204.7 million versus the year-ago $28.1 million, a record. This compares to $108.5 million for the CHS energy segment, versus the year-ago $111.5 million. CHS cited grain marketing, retail operations, and its nutrient business for the success of the ag business. Ag business earnings also included a gain of $91.7 million on the company’s sale of stock of CF Industries Inc. This was CHS’s remaining 1.6 million shares of CF stock, with proceeds being $108.3 million.
Agriliance reports loss
St. Paul, Minn.-Agriliance LLC, the remaining retail joint venture between Land O’Lakes Inc. and CHS Inc., reported a net loss of $23.5 million on sales of $210.6 million for the first quarter ending Nov. 30, 2007, according to filings by parent CHS. This compares to a year-ago loss of $31.4 million on sales of $670 million. CHS and LOL acquired Agriliance’s crop nutrient and crop protection businesses, respectively, in September 2007, leaving only its retail distribution business with the joint venture. There was anticipation last fall that the remaining entity would be repositioned or sold; however, news of such an event has not been forthcoming. In the meantime, CHS reports that during its first quarter it and LOL each contributed $230 million to Agriliance to support its working capital requirements, primarily for crop nutrient and protection product trade payables that were not assumed by CHS or LOL upon the distribution of those assets to parents.
Agrium Alaska employees receive trade benefits
Kenai, Alaska-Some 150 employees of Agrium Inc.’s closed Kenai, Alaska, nitrogen plant will receive trade adjustment assistance benefits from the federal government, it was announced Jan. 8 in FR Today. Back in October, the benefits were denied. The initial investigation concluded that imports of anhydrous ammonia and urea did not contribute importantly to worker separations at the subject plant and no shift of production to a foreign source occurred. Agrium appealed the denial, however, submitting additional information about the competitive international nitrogen market. Department of Labor Certifying Officer Elliott Kushner later determined that increases of imports of anhydrous ammonia and urea, produced by Agrium’s Kenai operation, contributed importantly to the total or partial separation of workers and to the decline in sales or production at that firm. The benefits, which are for two years, will assist employees with job search and relocation, provide wage subsidies for those who accept lower paying jobs, and assist in paying health insurance premiums and Cobra.
Minemakers reconsiders Wonarah phosphates
West Perth, Western Australia-Minemakers Ltd., citing a move in global phosphate rock prices from $50/mt to $200/mt, is proceeding with a new feasibility study for development of its phosphate reserves in Wonarah in the Northern Territory. Minemakers says Wonarah is the largest known undeveloped phosphate resource in the country. Back in 2002, Minemakers adjudged the development unfeasible; however, soaring phos rock prices, as well as infrastructure improvements, have the company once again eyeing development. Minemakers notes that since 2002 the Alice Springs-Darwin railway has been completed and Timor Sea gas is now piped onshore to Darwin. It says further expansion of the latter could lead to the possibility of a DAP plant to serve Asia. An independent scoping study of Wonarah in early 2007 indicated that, depending on various mining, transportation, and exchange rate scenarios, a price of almost A$100/mt was required for economic validity. With current world price at US$200/mt, Minemakers says there is the potential for a highly profitable, large, and long-term operation at Wonarah, with a short payback period.