Termination of Proposed Combination of CF Industries with OCI’s European, North American and Global Distribution Businesses
May 23, 2016
DEERFIELD, Ill. & AMSTERDAM--(BUSINESS WIRE)--
CF Industries Holdings, Inc. (CF) and OCI N.V. (OCI.NX) today announce the termination of the proposed combination of CF and the European, North American and Global Distribution businesses of OCI. The Treasury announcement on April 4, 2016 materially reduced the structural synergies of the combination. Since that time, both companies have worked together collaboratively to explore alternative transactions and structures that would be attractive to their respective shareholders. However, the companies were unable to identify an alternative acceptable to both parties and, therefore, agreed to terminate the combination.
"Although the original deal created significant value for both parties, changes in the regulatory and commercial environments forced us to re-evaluate the combination and led us to the conclusion that terminating the agreement is in the best interests of CF Industries and its shareholders." said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. "I want to thank the management team of OCI for their professionalism and collaboration throughout our discussions."
OCI N.V. CEO Nassef Sawiris commented: “Despite not having been able to reach an agreement on an alternative transaction or structure, we have the utmost respect for CF’s management and I would like to thank Tony and his team for all the effort. The level of goodwill and collaboration between the two companies has been positive at all levels of management since our discussions started last year, which leads me to believe that in the future we can explore alternative ways of collaboration or structures to create value for our respective shareholders.”
As contemplated in the combination agreement, CF will pay OCI $150 million in connection with the termination.
Coffeyville Resources Nitrogen Fertilizers, LLC, located in Coffeyville, Kansas, is the only fertilizer facility in North America that utilizes a petroleum coke, or pet coke, gasification process to produce nitrogen fertilizer. The plant, which sits on 35 acres, includes a 1,300 ton-per-day ammonia unit, a 3,000 ton-per-day urea ammonium nitrate (UAN) unit and a gasifier complex having a capacity of 89 million standard cubic feet per day of hydrogen. Our gasifier is a dual-train facility, with each gasifier able to function independently of the other, thereby providing redundancy and improving reliability.
The Coffeyville plant enjoys the benefit of a stable and secure raw material supply. The primary raw material feedstock used in the plant's nitrogen fertilizer production process is pet coke, which is produced during the crude oil refining process. We currently purchase most of our pet coke from CVR Refining, which owns the Coffeyville refinery adjacent to the fertilizer plant. Please click here for more information on the Coffeyville plant's nitrogen fertilizer
But as normal seasonal conditions return in early March, prices recovered to levels comparable to the field price from last summer and prices have stayed firm into April driven by the expectation of another size and planting of corn acres this spring in the United States. The USDA confirmed this view at the end of March when it came out with its initial planting estimate of 93.6 million acres which is 6% higher than last year’s planting of 88 million acres.
This estimate was much higher than industry consensus at the time, and applies an even strong need for nitrogen fertilizers in spring than what was anticipated at the time of our last earnings call in February. A lot of nitrogen has been applied since the start of the planting season and we expect additional orders during the coming weeks to meet the expected increase and demand from our customers.
Corn prices are a critical variable for setting the UAN billed price, it usually occurs in June and July. Future corn prices are driven by a number of factors including the amount of corn that ultimately gets planted, harvest fields in the U.S. and expected global supply-demand. During the sales, the Coffeyville plant typically sales forward a substantial portion of its second half production and agreed upon pricing with delivery spread over a multi-month period.
Thing No. 1: Feltl loves fertilizer
The analyst in question, Feltl & Co., isn't necessarily the best-known name on Wall Street -- but perhaps it should be. While we don't have a lot of data collected on this analyst yet, Feltl already ranks in the top 5% of investors we track on Motley Fool CAPS, and has historically gotten more of its picks right than wrong.
Yesterday, Feltl picked up coverage of CVR Partners and assigned the fertilizer producer a strong buy rating, with a prediction the stock will hit $9.60 per share within a year (CVR currently costs closer to $8.40).
Cowen cuts Potash, Mosaic, Intrepid Potash, CF Industries
Apr 14 2016, 11:16 ET | About: Potash Corporation of Saska... (POT) | By: Carl Surran, SA News Editor Contact this editor with comments or a news tip
Potash (POT -2.4%), Mosaic (MOS -3.5%), Intrepid Potash (IPI -8.2%) and CF Industries (CF -1.3%) are downgraded to Underperform from Market Perform at Cowen, which cites the risk of a further deterioration in the grain environment and the belief that nutrient prices and margins still have room to fall.Cowen expects an increase in U.S. corn acreage to 93.6M acres from 88M acres, plus anticipated gains in Brazilian and Argentine output, to cause a sizeable drop in corn prices and 2017 corn acreage, which would weigh on ag company shares.The firm cuts its price targets for POT to $14 from $16, MOS to $23 from $32, and CF to $25 from $44; Agrium (AGU -3.7%) and CVR Partners (UAN -3.2%) are maintained with Market Perform ratings but with reduced price targets of $86 and $8, respectively.
CVR Partners to Announce 2016 First Quarter Results And Cash Distribution on April 28
Executive Conference Call to be Held at 11 a.m. Eastern on April 28
PR Newswire CVR Partners, LP
30 minutes ago
SUGAR LAND, Texas, April 14, 2016 /PRNewswire/ -- CVR Partners, LP (UAN), a manufacturer of ammonia and urea ammonium nitrate (UAN) solution fertilizer products, today announced that it will release its 2016 first quarter results and announce its cash distribution on Thursday, April 28, before the open of New York Stock Exchange trading. Chief Executive Officer Mark Pytosh and other executives will host a teleconference call for analysts and investors on April 28 at 11 a.m. Eastern.
The combination of CVR Partners' Coffeyville, Kansas, fertilizer plant and the East Dubuque facility provides the partnership with an expanded geographical footprint, diversification of its raw material feedstocks, wider customer reach and greater potential for cash-flow generation.
"The addition of East Dubuque to CVR Partners positions us as an emerging leader in the North American nitrogen fertilizer industry and makes us more competitive in a changing market environment," said Mark Pytosh, chief executive officer. "CVR Partners is now better equipped to weather cyclical downturns, excel in dynamic market conditions and act on growth opportunities. We expect the enhanced strategic platform of the combined business will create value for our unitholders, customers and employees.
"We welcome East Dubuque's experienced management team and talented workforce to CVR Partners," Pytosh said.
In 2015, the Coffeyville plant produced 385,400 tons of ammonia and 928,600 tons of UAN, and the East Dubuque plant produced 340,300 tons of ammonia and 279,000 tons of UAN.
*DJ News On Rentech Nitrogen Partners L.P. (RNF) Now Under UAN
Mar 31, 2016 17:08:00 (ET)
(END) Dow Jones Newswires
March 31, 2016 17:08 ET (21:08 GMT)