A senior Potash Corp. of Saskatchewan Inc. official has hinted that the company is considering the sale of its 14 percent stake in Israel Chemicals Ltd., according to a report on June 10h in the Calcalist economic daily. The report quoted PCS CFO Wayne Brownlee as saying that PCS has no intention of holding to its ICL shares indefinitely.
Brownlee made the statement in a comment on the recommendations of the government appointed committee on tax and royalty payments by companies utilizing Israel’s natural resources. Last month the committee headed by Professor Eitan Sheshinski recommended that a uniform royalty payment of 5 percent on potash, phosphates and other minerals and a “windfall tax” on natural resources. The proposal called for imposing a 42 percent surtax on excess profits would be levied on net profits above an 11 percent return on investment.
The recommendations are expected to cost ICL over $100 million annually once they are implemented. More than a year ago PotashCorp tried to merge with ICL but the move was thwarted due to strong opposition from Israel’s Finance Minister Yair Lapid and from the unions at ICL.
PCS owns a 13.84 percent stake in ICL which has a current value of $1.55 billion. Brownlee was quoted as saying that any sale would not be in the short term and in any case not on the Tel Aviv Stock Exchange. Such a move would likely send ICL’s share price down sharply. He said it would depend on the conditions and whether it created value for PotashCorp investors. ICL shares fell by 1.5 percent in trading on the TASE on the report.