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
DEERFIELD, Ill. & ST. PAUL, Minn.--(BUSINESS WIRE)--
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 Industries
Dan Swenson, 847-405-2515
Treasurer
dswenson@cfindustries.com
Chris
Close, 847-405-2542
Director, Corporate Communications
cclose@cfindustries.com
or
CHS
Inc.
Lani Jordan, 651-355-4946
Director, Corporate
Communications
lani.jordan@chsinc.com
Source: CF Industries Holdings, Inc.