Incitec Pivot sells US ammonia facility for $2.5b

Incitec Pivot Limited Image credit: Incitec Pivot Limited

Incitec Pivot Limited has agreed to sell its ammonia manufacturing facility in Waggaman, Louisiana to CF Industries Holdings, Inc. (CF) for USD 1.675 billion (AUD 2.5 billion).

The ASX-listed company Incitec also secured a 25-year ammonia supply with CF for up to 200,000 short tonnes of ammonia per annum to support the Dyno Nobel Americas (DNA) explosives business.

Waggaman’s divestment is still subject to US antitrust regulatory approval and the fulfilment of other customary closing conditions, Incitec said in a press release. 

The company also said that these requirements must be met in accordance with the selling agreement’s provisions within 24 months of the contract’s execution.

In particular, the long-term ammonia supply agreement provides a foundation for monetising DNA’s current excess ammonia exposure while retaining the strategic value of cost-competitive ammonia supply into our DNA explosives business.

Additionally, it offers a platform for improving the quality of earnings while maintaining a highly competitive cost position. 

The deal also gives the freedom to look for debottlenecking options at the DNA factory in Louisiana, Missouri to support the achievement of our value-based growth goals.

Jeanne Johns, IPL’s managing director and CEO, said the announcement represents a crucial milestone in the implementation of the company’s plan to sharpen the focus of its businesses on the high-value technical and service demands of our customers who use explosives.

“We are also delighted to be partnering with CF Industries, a world-class producer of ammonia with an excellent manufacturing and safety track record,” the CEO noted.

“We are looking forward to this journey as we seek to deliver long-term sustainable value creation for our shareholders and stakeholders,” Johns concluded.

The sale’s net cash proceeds are expected to be allocated in accordance with IPL’s previously disclosed Capital Allocation Framework. J.P. was hired by IPL. 

Morgan Securities LLC served as the transaction’s financial advisor, and Latham & Watkins LLP served as its legal counsel.