OCI Global Completes Sale of IFCO to Koch Ag & Energy Solutions

Rhea-AI Summary

OCI Global has successfully completed the sale of its 100% equity interests in Iowa Fertilizer Company (IFCO) to Koch Ag & Energy Solutions (KAES) for USD 3.6 billion on a cash-free debt-free basis. This transaction, along with the recently announced sales of Fertiglobe and OCI Clean Ammonia, is expected to generate cumulative gross cash proceeds of approximately USD 9.5 billion. The sale marks a significant milestone in OCI's strategy to unlock shareholder value and provides flexibility for capital allocation, including deleveraging and returning capital to shareholders.

IFCO, commissioned in April 2017, was the first greenfield nitrogen fertilizer plant built in the US in over 25 years and the largest private construction project in Iowa's history. The sale to KAES positions IFCO for its next growth phase while demonstrating OCI's commitment to value creation for shareholders.

Positive

• Successful sale of IFCO for USD 3.6 billion, unlocking significant value for shareholders
• Expected cumulative gross cash proceeds of USD 9.5 billion from recent asset sales
• Increased financial flexibility for deleveraging and returning capital to shareholders
• Demonstration of OCI's success as a developer, operator, and investor in the nitrogen industry

Negative

• Divestment of a major asset (IFCO) may impact OCI's future revenue streams and market position in the US nitrogen industry

• OCI Global ("OCI") announces successful completion of the sale of 100% of its equity interests in Iowa Fertilizer Company LLC ("IFCO") to Koch Ag & Energy Solutions ("KAES")
• The transaction was valued at USD 3.6 billion on a cash free debt free basis and followed a competitive process
• The closing marks a significant milestone in OCI's strategy to unlock value for shareholders

AMSTERDAM, Aug. 29, 2024 /PRNewswire/ -- OCI Global (Euronext: OCI), a leading global producer and distributor of hydrogen products is pleased to announce the successful closing of the divestment of 100% of its indirect interest in its large-scale US greenfield nitrogen fertilizer facility Iowa Fertilizer Company LLC, in Wever, Iowa to Koch Ag & Energy Solutions, signed on December 18, 2023, following the required regulatory and shareholder approvals.

The closing marks a significant milestone in OCI's ongoing strategic value creation journey. The expected cumulative crystallization of approximately USD 9.5 billion gross cash proceeds from the recently announced sales of Fertiglobe, IFCO and OCI Clean Ammonia affords OCI significant flexibility to deliver on its capital allocation priorities, including deleveraging at a gross level as well as returning a meaningful quantum of capital to shareholders.

IFCO was the first greenfield nitrogen fertilizer plant built in the United States in over 25 years, and the largest private construction project in Iowa's history, adding more than 3,500 jobs during the construction period. Since commissioning in April 2017, the facility has revitalized a core industry in the United States reflecting OCI's continued investment in the plant's ongoing development, and in the surrounding region's distribution and logistics infrastructure to support the Midwest's agriculture industry. OCI is confident that under KAES's stewardship, IFCO will be well positioned for its next phase of growth.

For more information on the transaction, reference is made to the press release published on December 18, 2023.

Commenting on the announcement, Nassef Sawiris, Executive Chairman of OCI said: "The successful closing of the IFCO transaction is the latest example of OCI's steadfast commitment to creating value for its shareholders. This milestone further reinforces OCI's standing and record as a successful developer, operator and investor. Looking ahead, we will continue to deploy our distinctive knowledge, management expertise and entrepreneurial spirt into further value accretive ventures."

Ahmed El Hoshy, CEO of OCI said: "We are exceptionally proud of OCI and the IFCO operating team's remarkable achievements in converting a cornfield into a world-class global nitrogen facility and in revitalizing a core industry in the United States. KAES today is opportunely positioned both strategically and geographically to leverage and diversify its extensive platform, and to create significant opportunities to drive the facility's future growth. We have been impressed by the entire KAES team throughout this process and wish them the best of luck in their onward journey."

Advisors

Morgan Stanley & Co. International plc is serving as financial advisor to OCI on the transaction. Cleary Gottlieb Steen & Hamilton LLP is acting as its legal advisor.

About Iowa Fertilizer Company 

Iowa Fertilizer Company is a wholly owned indirect subsidiary of OCI, located in the US Midwest corn belt and one of the youngest, most innovative nitrogen assets globally. OCI brought IFCO to the market in early 2013 as a greenfield project. The facility was one of the largest private sector construction projects in Iowa's history and the first world-scale, greenfield nitrogen fertilizer plant built in the United States in more than 25 years. IFCO provides farmers in the Midwest and around the United States a stable high-quality and domestic source of fertilizer. IFCO also produces diesel exhaust fluid, which helps reduce harmful vehicle exhaust emissions. IFCO has the capacity to produce 3.5 million metric tons of nitrogen fertilizers and diesel exhaust fluid annually.

About OCI Global

We are a global leader in nitrogen, methanol, and hydrogen, driving forward the decarbonization of the energy-intensive industries that shape, feed and fuel the world. OCI's production capacity spans four continents and comprises approximately 17.2 million metric tons per year of hydrogen-based products including nitrogen fertilizers, methanol, biofuels, diesel exhaust fluid and melamine. OCI has more than 4,000 employees, is headquartered in the Netherlands and listed on Euronext in Amsterdam.

Learn more about OCI at www.oci-global.com. You can also follow OCI on LinkedIn.

View original content:https://www.prnewswire.com/news-releases/oci-global-completes-sale-of-ifco-to-koch-ag--energy-solutions-302234215.html

SOURCE OCI Global

FAQ

What is the value of OCI Global's sale of IFCO to Koch Ag & Energy Solutions?

OCI Global sold its 100% equity interests in Iowa Fertilizer Company (IFCO) to Koch Ag & Energy Solutions for USD 3.6 billion on a cash-free debt-free basis.

How much total cash proceeds does OCI Global expect from its recent asset sales?

OCI Global expects to generate cumulative gross cash proceeds of approximately USD 9.5 billion from the recently announced sales of Fertiglobe, IFCO, and OCI Clean Ammonia.

What are OCI Global's plans for the proceeds from the IFCO sale?

OCI Global plans to use the proceeds for capital allocation priorities, including deleveraging at a gross level and returning a meaningful amount of capital to shareholders.

When was IFCO commissioned and what was its significance?

IFCO was commissioned in April 2017 and was the first greenfield nitrogen fertilizer plant built in the United States in over 25 years, as well as the largest private construction project in Iowa's history.