Moody's Rates Agrium US $1B Program


Agrium Inc.’s (AGU) wholly-owned subsidiary Agrium US Inc.’s $1 billion commercial paper (CP) program has been assigned a Prime-2 rating by Moody's Investors Service. The CP program will be used for general corporate purposes. Agrium US is a direct borrower under the CP program and a guarantor on any borrowings by Agrium under this program.

Similarly, Agrium is the guarantor for any CP borrowings by Agrium US. The CP program is backed by the two companies’ $2.5 billion multi-jurisdictional revolving credit facility, set to mature in 2017. It also has a $500 million swingline to provide same day availability for funds in New York. Both Agrium and Agrium US are unlimited and unconditional guarantors of the revolving credit facility.

Last month, Agrium released its third-quarter 2013 results. The company’s profit for the quarter dropped 41% year over year to $76 million or 52 cents per share from $129 million or 80 cents a year ago.

The results were affected by lower sales prices for urea, phosphate and potash and production outages across Agrium’s Redwater and Carseland nitrogen facilities. Moreover, uncertain fertilizer market conditions coupled with late growing season in North America, which caused delayed crop nutrient purchases, also contributed to the declined results.

Excluding one-time items other than stock-based payments, earnings of 61 cents per share beat the Zacks Consensus Estimate of 59 cents. Adjusted earnings exclude write-down on Agrium’s Hanfeng Evergreen Inc. investment and loss on hedge positions.

Moving ahead, lost production due to nitrogen plant outages is expected to impact sales volumes in the fourth quarter and reduce earnings for the quarter by 20 cents per share. Agrium expects earnings (excluding items) for the fourth quarter in the band of 80 cents to $1.25 per share.

Agrium currently carries a Zacks Rank #3 (Hold).

Other companies in the fertilizer and related industries with favorable Zacks Rank include China Bluechip ADR (CBLUY), The Andersons, Inc. (ANDE) and The Scotts Miracle-Gro Company (SMG). While China and The Andersons carry a Zacks Rank #1 (Strong Buy), Scotts Miracle-Gro holds a Zacks Rank #2 (Buy).

Read the Full Research Report on ANDE
Read the Full Research Report on AGU
Read the Full Research Report on SMG
Read the Full Research Report on CBLUY

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