Itafos (TSX-V: IFOS), a portfolio company of Zaff LLC and Pala Investments Limited, has entered into an agreement to acquire from Agrium Inc. (TSX/NYSE: AGU) Conda Phosphate Operations for US $100 million inc ash, which includes inventory, on a cash and debt free basis.
Based in Conda, Idaho, Conda Phosphate Operations include phosphate production facilities and adjacent phosphate mineral rights, produces approximately 540,000 metric tons per year of mono-ammonium phosphate (MAP), super phosphoric acid (SPA), merchant grade phosphoric acid (MGA) and specialty products.
As part of the sale of the Conda business, Agrium and Itafos will enter into long-term strategic supply and off-take agreements as part of the transaction. Under the terms of the supply and off-take agreements, Agrium will supply 100% of the ammonia requirements of Conda Phosphate Operations and purchase 100% of MAP product produced, with pricing formulas for both tied to benchmark phosphate fertilizer prices.
The transaction is expected to close by year end 2017, subject to customary closing conditions, including approval of the Federal Trade Commission and approval of the TSX Venture EWxchange.
“This transaction is transformative for Itafos and vastly accelerates our strategic objective of becoming a leading global player in the phosphate fertilizer industry,” said Brian Zatarain, Chief Executive Officer of Itafos. “Conda Phosphate Operations further diversifies our global position of long-term strategic phosphate assets with an operating business in North America that has a long and successful track record of safe, responsible, reliable, continuous and financially stable operations.”
Agrium has also entered into a definitive asset purchase agreement with Trammo Nitrogen Products, Inc., a wholly-owned subsidiary of Trammo Inc., whereby Agrium will sell its North Bend, Ohio Nitric Acid facility
The Conda facility and related assets include the entirety of Agrium’s SPA business in North America and the North Bend facility represents the entirety of Agrium’s nitric acid business in the Midwest region. These divestitures are intended to address U.S. regulatory concerns raised with respect to Agrium’s merger with PotashCorp and are subject to U.S. Federal Trade Commission’s approval.
photo credit: Agrium, Conda Phosphate Operations