Midwest Fertilizer Company – Fatima update

Fatima Fertilizer Company published its 2015 Annual Report last week.

I wouldn’t normally write an update simply to say that a company has posted a document but, while lots of people are watching for news of Midwest Fertilizer’s $2.8 billion Indiana greenfield, I think fewer people are watching its sponsor company in Pakistan.

Fatima affirms its intention to invest $300 million equity, this year – although it hasn’t contributed a penny yet – but there’s no real new information.

Mt Vernon-Fatima AR2015

Nonetheless, curious readers will enjoy learning more about Fatima, which seems to have had a bad year (not unlike US fertilizer companies) and won’t be issuing a dividend for 2015 because, “due to unstable market conditions, fertilizer industry faced extremely low off take situation.”

Fatima did successfully complete a $58 million debottlenecking project on its ammonia plant in Sadiqabad, which was commissioned in 2011, and extended its turnaround schedule from 12 to 18 months. It also acquired a second urea plant, which used to belong to DH Fertilizers – now named Fatimafert.

Now that ThyssenKrupp has the EPC contract, the next update I’m expecting for Midwest Fertilizer is financial close: beyond Fatima Fertilizer Company’s $300 million equity, there’s $1.2+ billion of tax-free bonds to remarket in Indiana, plus “term debt” and some additional amounts from Fatima’s parent, the Fatima Group, and a “consortium of international investors.” As I understand it, subsidiary Fatima Fertilizer Company will own ~35% of the equity, while parent Fatima Group will own a total of ~48%.

Full project details are in my Research Note for Mt Vernon, IN.

Once they’ve reached financial close, we might be ready for a ground-breaking ceremony, but the large uncertainty here is whether the project will reach financial close. Until it does, it hasn’t.

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