Phosphate Holdings Inc., which owns Mississippi Phosphates Corp., says that it has secured a commitment for a new security facility for up to $25 million from Transammonia. The information was released in PHI’s proxy statement in preparation for its May 27, 2010, stockholders’ meeting. The facility provides up to $10 million for letters of credit and a $15 million revolving loan feature. Amounts borrowed bear interest at the three-month LIBOR rate plus 6 percent. Outstanding letters of credit bear an all-in cost of 3.5 percent per annum. The credit facility requires an annual fee of $50,000 during the revolving period of arrangement and a $35,000 annual fee thereafter.
The facility will be secured by a lien and security interest in PHI’s ammonia and sulfuric acid terminal assets and personal property. Closing on the credit facility is expected in the second quarter. The facility will replace one with PNC Bank. PHI said that in April 2009 it executed two amendments to its agreement with PNC, which waived noncompliance for two covenant violations at Dec. 31, 2008.
PHI already has close ties with Transammonia, as the company is its exclusive marketer of DAP into the export market and a major domestic customer. Effective Oct. 1, 2009, Miss Phos entered into a new one-year DAP sales contract with Transammonia whereby that company agreed to purchase Miss Phos’s entire DAP output, up to 716,000 st per contract year. Transammonia also has the right to purchase any excess DAP production. The price is determined quarterly and based on the ultimate destination and prevailing published prices. Miss Phos retained the option to keep up to eight barges of DAP per month from Transammonia to meet Miss Phos domestic demand. The contract will automatically renew each year unless cancelled by either party by July 1 of each year.
Transammonia also supplies Miss Phos with ammonia. This contract renewed Jan. 1, 2010, and is renewable every two years. Transammonia is also the exclusive user of the Miss Phos ammonia terminal; this contract renewed Jan. 1, 2010, for a two-year term.
On a more limited basis, Miss Phos has used Transammonia to supply sulfur and sulfuric acid.