CHS to Purchase Minority Equity Position in CF
Industries Nitrogen, LLC for $2.8 Billion
CHS Entitled to Purchase Annually up to 1.7
Million Tons of UAN and Urea from CF Industries Nitrogen for
Ratable Delivery
CF Industries Holdings, Inc. (NYSE: CF) and CHS Inc. (NASDAQ:
CHSCP) announced today that they have agreed to enter into a
strategic venture. CHS, the nation’s leading farmer-owned
cooperative, will make an equity investment in a wholly owned CF
subsidiary and also enter into a supply agreement. Under the supply
agreement, CHS will be entitled to purchase annually up to a total
of 1.7 million tons of UAN and urea at market prices. CHS will
purchase a minority equity interest in CF Industries Nitrogen, LLC
(“CF Nitrogen”) for $2.8 billion and be entitled to semi-annual
profit distributions from CF Nitrogen.
CF Nitrogen currently owns three production facilities in the
United States: Donaldsonville, Louisiana; Port Neal, Iowa; and
Yazoo City, Mississippi. CF also expects to contribute its
Woodward, Oklahoma, plant to the LLC prior to the transaction
closing. CF will continue to manage and operate all production
facilities.
“This venture represents tremendous strategic value to both CF
Industries and CHS,” said Tony Will, president and chief executive
officer, CF Industries Holdings, Inc. “In the past, we have entered
into long-term relationships with industry leaders Mosaic and
Orica, and this venture with CHS, an industry leader in
agriculture, is the logical next step. This transaction matches us
with a reliable partner that will take ratable delivery of product
across the year, supported by an attractive valuation.”
“Entering nitrogen fertilizer manufacturing through the purchase
of a minority ownership in CF Nitrogen is the single largest
investment in CHS history,” said Carl Casale, president and chief
executive officer, CHS Inc. “This positions CHS and our owners for
long-term dependable fertilizer supply, supply chain efficiency and
economic value. In addition, the ability to source product from CF
Nitrogen production facilities under our supply agreement benefits
our owners and customers through strategically positioned access to
essential fertilizer products.”
Once the capacity expansion projects are completed at
Donaldsonville and Port Neal, CF will have total production of 18.9
million product tons, not including the new capacity from the
business combination with OCI N.V. Of that total 18.9 million tons,
CHS will have the right to purchase up to 1.7 million tons, or
about 8.9 percent of CF Industries’ total production capacity. CHS,
a major CF customer and knowledgeable industry leader, is making a
$2.8 billion investment for approximately 8.9 percent of CF’s total
system capacity.
CF Nitrogen will sell annually to CHS up to 1.1 million tons of
granular urea and 580,000 tons of UAN, at market prices. The 1.7
million tons available under the supply agreement have an average
gross margin that reflects the average gross margin across the
entire CF system.
CHS’s semi-annual profit distributions from CF Nitrogen will be
based generally on the volume of granular urea and UAN purchased by
CHS pursuant to the supply agreement.
The transaction is expected to close February 1, 2016, or
earlier by mutual consent, subject to satisfaction of certain
conditions.
Morgan Stanley & Co. LLC and Goldman, Sachs & Co. are
serving as financial advisors to CF Industries on the transaction.
Skadden, Arps, Slate, Meagher & Flom LLP is acting as its legal
advisor. Kirkland & Ellis LLP is acting as its tax advisor.
Baker & McKenzie LLP is acting as legal advisor to CHS on the
transaction.
CF Industries Conference
Call
CF Industries Holdings, Inc. 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
9:00 am ET on Wednesday, August 12, 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 9517956. The conference call also
will be available live on the company’s website at
www.cfindustries.com. 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 9517956.
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, Canada, and the United Kingdom, 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 a 50 percent interest in 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.
About CHS Inc.
CHS Inc. (www.chsinc.com) is a leading global agribusiness owned
by farmers, ranchers and cooperatives across the United States.
Diversified in energy, grains and foods, CHS is committed to
helping its customers, farmer-owners and other stakeholders grow
their businesses through its domestic and global operations. CHS, a
Fortune 100 company, supplies energy, crop nutrients, grain
marketing services, animal feed, food and food ingredients, along
with business solutions including insurance, financial and risk
management services. The company operates petroleum
refineries/pipelines and manufactures, markets and distributes
Cenex® brand refined fuels, lubricants, propane and renewable
energy products.
CHS Inc. Forward-Looking
Statements
This document and other CHS Inc. publicly available documents
contain, and CHS officers and representatives may from time to time
make, “forward–looking statements” within the meaning of the safe
harbor provisions of the U.S. Private Securities Litigation Report
Act of 1995. Forward–looking statements can be identified by words
such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,”
“project,” “estimate,” “expect,” “strategy,” “future,” “likely,”
“may,” “should,” “will” and similar references to future periods.
Forward–looking statements are neither historical facts nor
assurances of future performance. Instead, they are based only on
CHS current beliefs, expectations and assumptions regarding the
future of its businesses, future plans and strategies, projections,
anticipated events and trends, the economy and other future
conditions. Because forward–looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict and many of
which are outside of CHS control. CHS actual results and financial
condition may differ materially from those indicated in the
forward–looking statements. Therefore, you should not rely on any
of these forward–looking statements. Important factors that could
cause CHS actual results and financial condition to differ
materially from those indicated in the forward–looking statements
are discussed or identified in CHS public filings made with the
U.S. Securities and Exchange Commission, including in the "Risk
Factors" discussion in Item 1A of CHS Annual Report on Form 10–K
for the fiscal year ended August 31, 2014. Any forward–looking
statements made by CHS in this document are based only on
information currently available to CHS and speak only as of the
date on which the statement is made. CHS undertakes no obligation
to publicly update any forward–looking statement, whether written
or oral, that may be made from time to time, whether as a result of
new information, future developments or otherwise.
CF Industries Holdings, Inc.
Forward-Looking Statements
All statements in this communication by CF Industries Holdings,
Inc. (together with its subsidiaries, the “Company”), other than
those relating to historical facts, are forward-looking statements.
Forward-looking statements can generally be identified by their use
of terms such as “anticipate,” “believe,” “could,” “estimate,”
“expect,” “intend,” “may,” “plan,” “predict” or “project” and
similar terms and phrases, including references to assumptions.
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 the Company’s control,
which could cause actual results to differ materially from such
statements.
Forward-looking statements include, but are not limited to,
statements regarding the proposed strategic venture between the
Company and CHS Inc. (“CHS”) pursuant to which CHS will make an
equity investment in, and enter into a supply agreement with, CF
Industries Nitrogen, LLC (the “Strategic Venture”), including,
without limitation, statements about the benefits of the Strategic
Venture, the expected timing of closing and other aspects of the
Strategic Venture. Important factors that could cause actual
results to differ materially from those in the forward-looking
statements relating to the Strategic Venture include, among others:
risks and uncertainties arising from the possibility that the
consummation of the Strategic Venture as contemplated may be
delayed or may not occur; difficulties associated with the
operation or management of the Strategic Venture; risks and
uncertainties relating to the market prices of the fertilizer
products that are the subject of the supply agreement over the life
of the supply agreement and risks that disruptions from the
Strategic Venture as contemplated will harm the Company’s other
business relationships.
Further, forward-looking statements include, but are not limited
to, statements regarding the proposed acquisition by the Company
from OCI N.V. ("OCI") of OCI’s European, North American and global
distribution businesses and certain other assets (the “Business”),
including, without limitation, statements about the benefits of the
acquisition transaction (the “Transaction”); the expected timing of
completion of the Transaction; future financial and operating
results of the new holding company (“New CF”), the Company and the
Business; New CF’s and the Company’s plans, objectives,
expectations and intentions; and other statements relating to the
Transaction that are not historical facts. Important factors that
could cause actual results to differ materially from those in the
forward-looking statements include, among others: risks and
uncertainties relating to the ability to obtain the requisite
approvals of stockholders of CF Industries Holdings, Inc. and OCI
with respect to the Transaction; the risk that New CF, the Company
and OCI are unable to obtain governmental and regulatory approvals
required for the Transaction, or that required governmental and
regulatory approvals delay the Transaction or result in the
imposition of conditions that could reduce the anticipated benefits
from the Transaction or cause the parties to abandon the
Transaction; the risk that a condition to closing of the
Transaction may not be satisfied; the length of time necessary to
consummate the Transaction; the risk that the businesses of the
Company and the Business will not be integrated successfully; the
risk that the cost savings and any other synergies from the
Transaction may not be fully realized or may take longer to realize
than expected; the risk that access to financing, including for
refinancing of indebtedness of the Business or the Company, may not
be available on a timely basis and on reasonable terms; the risk
that the Business is unable to complete its current production
capacity development and improvement projects on schedule as
planned and on budget or at all; the risk that the Transaction or
the prospect of the Transaction disrupts or makes it more difficult
to maintain existing relationships or impedes establishment of new
relationships with customers, employees or suppliers; diversion of
management time on transaction-related issues; the risk that New
CF, the Company and the Business are unable to retain and hire key
personnel; the effect of future regulatory or legislative actions
on New CF, the Company and the Business; the risk that the
Transaction is not accorded the tax and accounting treatment
anticipated by the Company; unanticipated costs or liabilities
associated with the Transaction-related financing; and the risk
that the credit ratings of New CF and the Company, including such
ratings taking into account the Transaction and related financing,
may differ from the Company’s expectations.
Additional important factors, which currently relate to the
Company and would relate to the Strategic Venture and the
combination of the Company and the Business, that could cause
actual results to differ materially from those in the
forward-looking statements include, among others, the volatility of
natural gas prices in North America and Europe; the cyclical nature
of the Company’s business and the agricultural sector; the global
commodity nature of the Company’s fertilizer products, the impact
of global supply and demand on the Company’s selling prices, and
the intense global competition from other fertilizer producers;
conditions in the U.S. and European 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 the Company’s products against which the
Company not be fully insured; risks associated with cyber security;
weather conditions; the Company’s ability to complete its
production capacity expansion projects on schedule as planned and
on budget or at all; risks associated with other expansions of the
Company’s business, including unanticipated adverse consequences
and the significant resources that could be required; 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; and the risk that
disruptions from the GrowHow transaction as contemplated will harm
relationships with customers, employees and suppliers; potential
liabilities and expenditures related to environmental and health
and safety laws and regulations; the Company’s 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
the Company’s forward sales programs; risks involving derivatives
and the effectiveness of the Company’s risk measurement and hedging
activities; the Company’s 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 the Company’s investments in
securities; deterioration of global market and economic conditions;
and the Company’s ability to manage its indebtedness. More detailed
information about factors that may affect the Company’s performance
and could cause actual results to differ materially from the
Company’s expectations may be found in CF Industries Holdings,
Inc.’s filings with the Securities and Exchange Commission,
including CF Industries Holdings, Inc.’s most recent periodic
reports filed on Form 10-K and Form 10-Q, which are available in
the Investor Relations section of the Company’s web site.
Forward-looking statements are given only as of the date of this
presentation and the Company disclaims 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.
No Offer or Solicitation
This presentation is not intended to and does not constitute an
offer to sell or the solicitation of an offer to subscribe for or
buy or an invitation to purchase or subscribe for any securities or
the solicitation of any vote or approval in any jurisdiction
pursuant to or in connection with the proposed transaction or
otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable law.
No offer of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended, and otherwise in accordance with
applicable law.
Additional Information
New CF will file with the SEC a registration statement on Form
S-4 that will include the proxy statement of CF Industries and the
shareholders circular of OCI that also constitute prospectuses of
New CF. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS, THE SHAREHOLDERS CIRCULAR/PROSPECTUS AND
OTHER RELEVANT DOCUMENTS FILED OR TO BE FILED WITH THE SEC
CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders will be able
to obtain free copies of the proxy statement/prospectus, the
shareholders circular and other documents filed with the SEC by New
CF and CF Industries through the website maintained by the SEC at
www.sec.gov. In addition, investors and security holders will be
able to obtain free copies of the proxy statement/prospectus, the
shareholders circular and other documents filed by CF Industries
and New CF with the SEC by contacting CF Industries Investor
Relations at: CF Industries Holdings, Inc., c/o Corporate
Communications, 4 Parkway North, Suite 400, Deerfield, Illinois,
60015 or by calling (847) 405-2542.
Participants in the
Solicitation
CF Industries and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
stockholders of CF Industries in connection with the proposed
transaction. Information regarding the persons who may, under the
rules of the SEC, be deemed participants in the solicitation of the
stockholders of CF Industries in connection with the proposed
transaction, including a description of their direct or indirect
interests, by security holdings or otherwise, will be set forth in
the proxy statement/prospectus when it is filed with the SEC.
Information regarding the directors and executive officers of CF
Industries is contained in CF Industries’ proxy statement for its
2015 annual meeting of stockholders, filed with the SEC on April 2,
2015, and CF Industries’ Current Report on Form 8-K filed with the
SEC on June 25, 2015.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150812005542/en/
CF IndustriesDan Swenson,
847-405-2515Treasurerdswenson@cfindustries.comChris Close,
847-405-2542Director, Corporate
Communicationscclose@cfindustries.comorCHS Inc.Lani Jordan,
651-355-4946Director, Corporate
Communicationslani.jordan@chsinc.com
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