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Unocal sells ag products business $325 million sale to Calgary-based Agrium Inc. includes fertilizer plant in Nikiski Kristen Nelson PNA News Editor
Unocal Corp.’s Alaska Nitrogen Products LLC subsidiary is being sold to Calgary-based Agrium Inc. as part of a US$325 million sale of Unocal’s agricultural products business which also includes the sale of Prodica LLC.
Unocal said Jan. 19 that under the sale agreement it will receive US$250 million in cash plus US$50 million in newly issued Agrium 6 percent convertible preferred securities and US$25 million in Agrium common stock (at a 4 percent discount to market). In addition, the agreement provides for participation payments to Unocal over the next six years related to future ammonia and urea prices.
Unocal Chairman and Chief Executive Officer Roger Beach called the sale the latest step in the ongoing transformation of Unocal into a new breed of energy company.
“As we divest our non-core businesses, we are able to focus on exploiting upstream opportunities, which historically has been the highest-return segment of the oil and gas industry,” he said.
Unocal expects to use the proceeds from the sale for general corporate purposes, including debt reduction.
The sale is subject to certain regulatory approvals. The company expects the transaction to be completed by early in the second quarter. Credit Suisse First Boston advised Unocal with respect to the sale.
320 work at Nikiski plant Alaska Nitrogen Products manufactures ammonia and urea for agricultural and industrial customers in the Pacific region. Agrium is a leading producer and marketer of fertilizer in North America and a major retail supplier of agricultural products and services in both North America and Argentina.
Unocal Alaska Resources spokeswoman Roxanne Sinz told PNA that 320 people currently work at the Nikiski plant. There are 291 Unocal positions on the plant’s organization chart, she said, 278 of which are filled currently plus 42 contract positions.
Sinz said that the purchase should be a good thing for employees of the plant: “They’ll be part of a company whose core business is agricultural fertilizer.” As far as the oil and gas portion of the company, she said, “we’re going to continue on as is — oil and gas is Unocal’s core business,” so the oil and gas side of the Alaska operation won’t be doing anything differently.
Unocal will continue to provide natural gas to the plant — gas is the raw material used to make ammonia and urea. “Our intent is to continue having a long-term relationship with the Kenai plant,” Sinz said.
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