CF Industries Announces Agreement to Acquire Remaining Fifty Percent Interest in GrowHow from Yara for $580 Million
July 01 2015 - 2:01AM
Business Wire
CF Industries Holdings, Inc. (NYSE:CF) announced today that it
has agreed with Yara International ASA (Yara) to acquire its 50
percent equity interest in GrowHow UK Limited (GrowHow) for total
cash consideration of $580 million, making GrowHow a wholly owned
subsidiary. At closing, the GrowHow business will be consolidated
into CF Industries with a cash free, debt free balance sheet.
GrowHow owns and operates nitrogen production facilities in Ince
and Billingham, U.K.
“We are pleased to announce this agreement to acquire Yara’s
interest in GrowHow,” commented Tony Will, president and chief
executive officer, CF Industries Holdings, Inc. “The operations
have an advantaged position in an import-dependent region. We know
GrowHow well and expect a mid-teens return profile for the
acquisition. The purchase of the remaining interest in GrowHow is a
continuation of CF Industries’ track record of pursuing shareholder
value-creating capital deployment.”
The Ince facility is located in northwestern England and
consists of an ammonia plant, three nitric acid plants, an ammonium
nitrate (AN) plant and three NPK fertilizer compound plants. The
Billingham facility is located in the Teesside chemical area in
northeastern England, and consists of an ammonia plant, three
nitric acid plants, a carbon dioxide plant and an AN fertilizer
plant. Combined, the two facilities have the capacity to produce
approximately 0.9 million short tons of gross ammonia, 1.2 million
short tons of AN and 0.4 million short tons of NPK compounds.
As of May 31, 2015, prior to purchase accounting and on a U.S.
GAAP basis, GrowHow had total inventories of £66 million,
receivables of £41 million, and fixed assets of £195 million. The
company also had current liabilities of £43 million, long-term
payables of £14 million, and a net pension deficit of £90
million.
The U.K. is dependent on imports of nitrogen to meet its
consumption demands. Nitrogen imports primarily consist of AN and
urea with ammonia accounting for a negligible portion of imports.
Currently, imports of AN to the U.K. make up approximately 45%
(700,000 short tons) of supply. Additionally, U.K. natural gas
costs have fallen meaningfully along with oil prices. In terms of
delivered cost of AN to the U.K., GrowHow is positioned at the low
end of the U.K. supply curve.
CF Industries has extensive knowledge of and familiarity with
the GrowHow business as a result of its involvement with the
GrowHow joint venture over the last five years. Earnings from CF
Industries’ 50 percent interest in GrowHow are currently included
in CF Industries’ financial statements under Equity in Earnings of
Non-Operating Affiliates – Net of Taxes. Following the closing of
the acquisition of the outstanding interests, the results will be
included in CF Industries’ consolidated results. The final purchase
price is subject to closing adjustments. The completion of the
transaction is subject to customary closing conditions and is
expected to occur later this year.
CF Industries will be posting a presentation with the
transaction highlights to the investor portion of the company’s
website at www.cfindustries.com and hosting a conference call at
4:00pm ET on Wednesday, July 1, 2015 to provide an overview of the
transaction and answer analysts’ questions. Investors can access
the call by dialing 866-748-8653 or 678-825-8234. The passcode is
78032368. The conference call also will be available live on the
company’s website. Participants also may pre-register for the
webcast on the company’s website. Please log-in or dial-in at least
10 minutes prior to the start time to ensure a connection. A replay
of the call will be available for seven days by calling (855)
859-2056 and citing code 78032368.
About CF Industries Holdings,
Inc.
CF Industries Holdings, Inc., headquartered in Deerfield,
Illinois, through its subsidiaries is a global leader in the
manufacturing and distribution of nitrogen products, serving both
agricultural and industrial customers. CF Industries operates
world-class nitrogen manufacturing complexes in the central United
States and Canada, and distributes plant nutrients through a system
of terminals, warehouses, and associated transportation equipment
located primarily in the midwestern United States. The company also
owns 50 percent interests in GrowHow UK Limited, a plant nutrient
manufacturer in the United Kingdom and an ammonia facility in The
Republic of Trinidad and Tobago. CF Industries routinely posts
investor announcements and additional information on the company’s
website at www.cfindustries.com and encourages those interested in
the company to check there frequently.
Safe Harbor Statement
All statements in this communication, other than those relating
to historical facts, are forward-looking statements. These
forward-looking statements are not guarantees of future performance
and are subject to a number of assumptions, risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from such statements.
These statements include, but are not limited to, statements about
the benefits, expected timing of closing and other aspects of the
GrowHow transaction as contemplated; statements about future
strategic plans; and statements about future financial operating
results. Important factors that could cause actual results to
differ materially from our expectations include, among others:
risks and uncertainties arising from the possibility that the
GrowHow transaction as contemplated may be delayed or may not
occur; an inability to achieve, or a delay in achieving, the
expected benefits of the GrowHow transaction as contemplated;
difficulties associated with the integration of GrowHow;
unanticipated costs or liabilities associated with the GrowHow
transaction; the risk that disruptions from the GrowHow transaction
as contemplated will harm relationships with customers, employees
and suppliers; the volatility of natural gas prices in North
America and the United Kingdom; the cyclical nature of our business
and the agricultural sector; the global commodity nature of our
fertilizer products, the impact of global supply and demand on our
selling prices, and the intense global competition from other
fertilizer producers; conditions in the U.S. and U.K. agricultural
industry; difficulties in securing the supply and delivery of raw
materials, increases in their costs or delays or interruptions in
their delivery; reliance on third party providers of transportation
services and equipment; the significant risks and hazards involved
in producing and handling our products against which we may not be
fully insured; risks associated with cyber security; weather
conditions; our ability to complete our production capacity
expansion projects on schedule as planned and on budget or at all;
risks associated with other expansions of our business, including
unanticipated adverse consequences and the significant resources
that could be required; potential liabilities and expenditures
related to environmental and health and safety laws and
regulations; our potential inability to obtain or maintain required
permits and governmental approvals or to meet financial assurance
requirements from governmental authorities; future regulatory
restrictions and requirements related to greenhouse gas emissions;
the seasonality of the fertilizer business; the impact of changing
market conditions on our forward sales programs; risks involving
derivatives and the effectiveness of our risk measurement and
hedging activities; our reliance on a limited number of key
facilities; risks associated with joint ventures; acts of terrorism
and regulations to combat terrorism; risks associated with
international operations; losses on our investments in securities;
deterioration of global market and economic conditions; and our
ability to manage our indebtedness. More detailed information about
factors that may affect our performance may be found in our filings
with the Securities and Exchange Commission, including our most
recent periodic reports filed on Form 10-K and Form 10-Q, which are
available in the Investor Relations section of the CF Industries
website. Forward-looking statements are given only as of the date
of this release and we disclaim any obligation to update or revise
the forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
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CF Industries Holdings, Inc.Dan
SwensonTreasurer847-405-2515dswenson@cfindustries.comorChris
CloseDirector, Corporate
Communications847-405-2542cclose@cfindustries.com
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