CF Industries Holdings, Inc. announced that it has entered into a set of strategic agreements with the Mosaic Company.
The agreements include:
*a definitive agreement to sell the entirety of CF Industries' phosphate mining and manufacturing business to Mosaic for cash consideration of $1.4 billion, subject to adjustment;
*a long-term agreement under which the Company will supply Mosaic with between 600,000 and 800,000 tons of ammonia per year from its Donaldsonville, Louisiana nitrogen complex beginning no later than 2017; and
*an agreement to provide ammonia to Mosaic from the Company's Point Lisas Nitrogen Ltd. (PLNL) joint venture beginning at the close of the phosphate sale.
"This is a set of agreements with significant strategic value to both CF Industries and Mosaic," said Stephen R. Wilson, chairman and chief executive officer, CF Industries Holdings, Inc.
"The sale of our phosphate operations represents good value for our shareholders and the full set of transactions enables us to sharpen the strategic focus on our nitrogen business."
Phosphate Business Sale
The phosphate sale includes: the Hardee County Phosphate Rock Mine; the Plant City Phosphate Complex; an ammonia terminal, phosphate warehouse and dock at the Port of Tampa; and the site of the former Bartow Phosphate Complex. In addition, Mosaic is assuming liabilities related to the phosphate business, including responsibility for closure, long-term maintenance and monitoring of the phosphogypsum stacks at the Plant City and Bartow complexes. CF Industries is also transferring to Mosaic the value of its asset retirement obligation trust and escrow funds totaling approximately $200 million.
Donaldsonville Ammonia Agreement
Under the long-term ammonia supply agreement, beginning no later than 2017 CF Industries will supply between 600,000 and 800,000 tons of ammonia per year for up to 15 years from its Donaldsonville nitrogen complex for Mosaic's use in phosphate production. The ammonia price will be based on the cost of natural gas delivered to Donaldsonville. "This agreement strengthens our confidence in the return we expect to generate from our Donaldsonville capacity expansion by providing a steady base demand for ammonia at a price that insulates us from movements in natural gas costs," stated Wilson.
Trinidad Ammonia Agreement
Following the close of the sale of the phosphate segment, CF Industries will supply its share of the ammonia produced by the Company's 50% owned PLNL ammonia production facility in the Republic of Trinidad and Tobago to Mosaic for use in phosphate production. Pricing under this supply agreement will be similar to that in the existing agreement under which the Company purchases ammonia from PLNL.
The phosphate sale transaction is subject to customary closing conditions and regulatory clearances, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Act and approval from the applicable governmental agencies under CF's consent decree with respect to certain environmental matters related to the phosphate business. The sale is expected to close sometime in 2014. Both companies' boards of directors have approved the transaction. The Donaldsonville ammonia agreement is not conditional on the phosphate sale transaction and will go into effect beginning no later than 2017. The Trinidad ammonia agreement is conditional on and goes into effect at the closing of the phosphate sale transaction.
Rothschild Inc. provided a fairness opinion on the phosphate sale transaction to CF Industries' board of directors. Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel.