14th Nov 2011 14:15
For Immediate Release 14 November 2011
PhosAgro to Merge Ammophos and Cherepovetsky Azot
Moscow - PhosAgro ("the Company"), a leading global vertically integrated phosphate-based fertilizer producer, announces it is considering plans to merge two of its subsidiaries, OJSC Ammophos and OJSC Cherepovetsky Azot.
The planned transaction would create a new company that assumes all the rights and obligations of the two subsidiaries. Under the proposed transaction, shareholders of Ammophos and Cherepovetsky Azot would receive shares of the new company, and the old companies would cease to exist as legal entities. The reorganisation is expected to complete in July-August 2012.
PhosAgro CEO Maxim Volkov said: "The proposed merger of Ammophos and Cherepovetsky Azot marks an important step for PhosAgro. By simplifying the structure of the company we hope to reduce the administrative costs incurred by maintaining two separate legal entities. This should also simplify the production process, as a significant portion of Cherepovetsky Azot's output is used within the group. Following the merger, production output is planned to be recorded on the balance sheet of a single legal entity, whereas at present we carry out intra-group transactions. Finally, we are confident that the merger will further increase transparency: the unified accounting department at the new subsidiary will simplify our financial reporting system for shareholders and regulatory bodies. We also plan to consider adding Agro-Cherepovets, another PhosAgro subsidiary, to the newly-created company at some point in the future."
The Company has initiated meetings of the board of directors of Ammophos and the supervisory board of Cherepovetsky Azot to convene extraordinary general meetings of shareholders (EGMs) to vote on the merger. PhosAgro expects that the shareholders of Ammophos and Cherepovetsky Azot will approve the proposal.
Should the proposal be approved, shareholders who voted against the reorganisation or who did not vote will have the right to have their shares bought out in the merger process.
PhosAgro management believes that the merger may create synergies by:
* Reducing managerial and transaction costs, centralising accounting procedures, financial control and records management, and removing other duplicate administrative functions. * Lowering borrowing and debt-servicing costs due to the increased size of the company. * Creating a single system to manage rail, energy and transport infrastructure, inventory and material and technical resources, service shops and maintenance services. * Consolidating the provision and distribution of large amounts of energy among subsidiaries. * Reducing energy supply costs: excess energy generated at Ammophos through recaptured steam from sulphuric acid production that is currently sold to the regional grid will replace the electricity purchased at higher cost on the wholesale market by Cherepovetsky Azot (given sales allowances, transport costs and the production cost of the electricity).
For further information please contact:
OJSC "PhosAgro"+7 495 231 2747Irina Evstigneeva, Head of Corporate Finance and Investor RelationsTimur Belov, Press OfficerM:CommunicationsUKStuart Leasor+ 44 20 7920 2317RussiaSam VanDerlip+7 495 663 8005Notes to Editors
PhosAgro is a leading global vertically integrated phosphate-based fertiliser producer. The Group focuses on the production of phosphate-based fertilisers, feed phosphate and high-grade phosphate rock, as well as ammonia and nitrogen-based fertilisers. In 2010, the Group was the largest phosphate-based fertiliser producer in Europe, the largest producer of high-grade phosphate rock worldwide and the third largest MAP/DAP producer in the world (excluding China) according to Fertecon. PhosAgro controls approximately 2.1 billion tonnes of high quality apatite-nepheline ore resources, which translates to over 75 years of production. The Group's strategic aim is to reinforce its position as a leading integrated global producer of fertilisers and to enhance overall value for its shareholders through increasing fertiliser and feed phosphate production capacities, utilising the full potential of its apatite-nepheline ore reserves base and continuing to improve operational flexibility and efficiency. PhosAgro is listed on the MICEX stock exchange (MICEX: PHOR) with its global depositary receipts listed on the London Stock Exchange (PHOR LI). The Group had revenues of approximately $2.5 billion in 2010 with EBIDTA of approximately $674 million. PhosAgro employs approximately 25,000 people.
For further information on PhosAgro please visit: www.PhosAgro.com
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