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Business
CF Industries Plans Stock Offering
by Alexander H. Tullo
May 23, 2005
| A version of this story appeared in
Volume 83, Issue 21
FERTILIZERS
Culminating its transformation from fertilizer cooperative to independent company, CF Industries is taking a step that has been common in the chemical industry over the past year: an initial public offering of common stock on the New York Stock Exchange.
In a preliminary prospectus filed with the Securities & Exchange Commission, CF values the offering at $700 million. The number of shares and their price range, as well as the company's ticker symbol, are yet to be determined.
The company says it supplies 22% of the nitrogen fertilizers and 14% of the phosphate fertilizers used in the U.S. It generated sales of $1.7 billion in 2004 and net earnings of $67.7 million.
For most of its history, CF has been a cooperative with a mission of supplying fertilizers to owners such as Land O'Lakes and Tennessee Farmers Cooperative. In 2002, it changed focus to become a financial-performance-driven company. As a result, nonaffiliated customers, roughly 20% of its sales in 2002, now represent 41% of revenues. Proceeds from the transaction will be distributed to its present owners.
CF says it is trying to reduce high natural gas costs in its nitrogen fertilizer business. It is studying an ammonia joint venture in Trinidad & Tobago with fertilizer competitor Terra Industries and local partner ANSA McAL.
Ken Nyiri, a nitrogen fertilizer analyst with British Sulphur Consultants, says this may be the opportune time for the offering. "You want to go public at the top of the cycle," he says. "Right now, the nitrogen cycle is near its peak."
CF Industries joins companies such as Huntsman Corp., Celanese, Nalco, Westlake Chemical, and Hexion Specialty Chemicals with recent or planned public offerings.
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