Month: April 2011

January 18, 2011, 4:08 pm I.P.O./Offerings
Cargill to Split Off Mosaic Unit in Complex Deal

http://dealbook.nytimes.com/2011/01/18/cargill-to-spin-off-its-mosaic-unit-in-complex-deal/?hpw
By MICHAEL J. DE LA MERCED
8:39 p.m. | Updated
Cargill said on Tuesday that it planned to spin off its 64 percent stake in the Mosaic Company, a big producer of important ingredients in fertilizer, leaving Mosaic open for a possible sale at a time when mining and agriculture giants are on the prowl for acquisitions.
The complicated tax-free transaction — worth more than $24 billion — will also help keep Cargill, one of the biggest American companies, private. Cargill will distribute its 286 million Mosaic shares to its own shareholders and debtholders.
Begun in 1865 by William Wallace Cargill with a single grain elevator in Iowa, Cargill has since become a colossus of the global agricultural business. It reported $2.6 billion in earnings on top of $107.9 billion in revenue for its fiscal year that ended May 31.
The corporate parent’s sale of its 64 percent stake in Mosaic comes as big mining companies have been seeking to expand in fertilizer. That interest was amply illustrated by the Australian mining company BHP Billiton’s $38.6 billion unsolicited takeover offer for Potash of Saskatchewan, the world’s largest producer of the fertilizer component.
BHP ended its pursuit in November after Canadian regulators objected to a possible deal. As standards of living improve in countries like China and India, global demand for food is rising and companies that produce fertilizer are being seen as attractive takeover targets.
“The world is not getting less hungry,” James T. Prokopanko, Mosaic’s chief executive, said on Tuesday afternoon during a conference call with analysts.
Mosaic was formed in 2004 from the merger of Cargill’s crop nutrition unit with IMC Global, creating a giant in fertilizer production and leaving Cargill with a 64 percent stake. It is the world’s second-largest potash producer, behind Potash, and owns more than a third of Canpotex, the Canadian entity that controls that country’s exports of the material.
A major component of Cargill’s earnings, Mosaic reported about $8.5 billion in revenue and $1.9 billion in profit for the 12 months that ended Nov. 30. Based in Plymouth, Minn., it has 7,500 employees.
As of Tuesday’s closing price of $85.04, Mosaic had a market value of $37.9 billion.
Years in the making, the spinoff is meant to help both Cargill and Mosaic. It will bolster the liquidity of Mosaic’s stock, as well as give the business greater financial freedom.
Mr. Prokopanko said the spinoff would put more than 50 percent of Mosaic’s shares in public investors’ hands, making the company eligible for listing in the Standard & Poor’s 500-stock index.
It will also help Cargill focus on core operations like grain purchasing and distribution and the making of food ingredients like dressings and sauces, as well as improve its credit rating by paying down debt.
“We’re thrilled about it,” Mr. Prokopanko said in a telephone interview on Tuesday. “I can’t stress strongly enough how this will free us to grow the business.”
But the deal is also aimed at helping diversify the holdings of various charitable trusts and foundations that make up a large portion of Cargill’s investor base, according to people briefed on the matter. Under the terms of a will set up for Margaret A. Cargill, a descendant of Cargill’s founder who died in 2006, the various trusts set up to hold company shares must diversify their portfolios over time.

Under the terms of the transaction, Cargill’s existing shareholders will be given the chance to exchange their holdings for up to 179 million of Cargill’s shares in Mosaic. Cargill will also offer its existing debtholders the chance to swap their holdings for up to 107 million Mosaic shares.
Within 15 months of the closing of the spinoff, Mosaic will hold sales for about 157 million of those spun-off shares. The first such sale would be held immediately after the closing of the deal, which is expected in the second quarter this year.
Any of the 129 million shares not sold during those offerings are subject to a lockup of two and a half years after the spinoff closes. Mosaic expects to fully sell off the newly distributed shares within four and a half years, Lawrence W. Stranghoener, Mosaic’s chief financial officer, said in a telephone interview.
Cargill stressed that a crucial component to the complicated spinoff is an expected sign-off by the Internal Revenue Service regarding the tax-free nature of the deal. But Mosaic and Cargill would entertain a takeover offer for the business if it were high enough to compensate for the loss of any tax benefits incurred in that transaction, the people briefed on the matter said.
The deal was approved by a special committee of the Mosaic board, but must still be voted on by a majority of its non-Cargill shareholders.
Cargill was advised by Credit Suisse and the law firm Fried, Frank, Harris, Shriver & Jacobson, while the company’s special board committee was advised by JPMorgan Chase and the law firm Simpson Thacher & Bartlett.
The Cargill charitable trusts were advised by UBS and the law firm Loeb & Loeb.

Manatee’s environmental scourge recast as asset
http://www.heraldtribune.com/article/20110106/ARTICLE/101061069/2416/NEWS?Title=Manatee-s-environmental-scourge-recast-as-asset

Sarasota Herald Tribune

STAFF PHOTO / TOM BENDER
Buy photo
Eastport Terminal manager Jeff Barath says, “the remediation and redevelopment of the former Piney Point Phosphates facility has taken great vision and resolve by HRK. Purchasing the site in 2006 as a dilapidated chemical plant we had to spend the next three years just addressing environmental clean up and demolition before we could begin any new development.”

By Kate Spinner
Published: Thursday, January 6, 2011 at 1:00 a.m.
Last Modified: Wednesday, January 5, 2011 at 9:00 p.m.

PALMETTO – Across U.S. 41 from the Port of Manatee, a large grassy hill looms unnaturally over the flat landscape, overshadowing a cluster of new industrial silos.

Click to enlarge
A view of the lined reservoirs up top on the old gypsum stacks. The reservoirs will be used to store dredge waste from the Port Manatee expansion and will eventually be capped.

Click to enlarge
A view of the new geodesic dome structures housing fertilizer used in today’s agriculture industry.
No trace remains of the fertilizer plant that operated here for 40 years, or of the company that drove it into bankruptcy and left behind a $144 million environmental disaster for taxpayers to shoulder.
But even as new owners try to recast this property as Eastport Terminal, the road here still bears the infamous name Piney Point.
And the grassy hill? A slightly radioactive phosphogypsum stack that once held 1.2 billion gallons of toxic water behind crumbling walls, it stands as testament to Piney Point’s history.
The name conjures memories of a litany of environmental problems, culminating in an unprecedented emergency in 2003, in which the state dumped millions of gallons of the fertilizer processing wastewater into the Gulf of Mexico to keep it from cascading onto nearby land and into Tampa Bay.
Before that, there were industrial accidents leading to employee deaths, toxic spills that forced area evacuations and a sulfuric gas leak that caused illness in the community.
Today the land is transforming into a potential economic asset, a pioneering model, state officials hope, for two dozen similar sites statewide that are contaminated with the toxic byproducts of phosphate fertilizer production.
The new silos are partially filled with 30,000 tons of imported fertilizer. A nearby warehouse holds tons of salt, the kind used in swimming pools. Hundreds of acres in the shadow of the gypsum stack are available for more bulk storage or light manufacturing.
After a decade of work, the state considers the site safe for new industry and has handed responsibility for cleaning up the small amount of remaining contamination to the new owner, HRK Holdings, LLC.
“It’s a success story at this point, in terms of having the work created there and having the site fully transition to the new owner,” said John Coates, deputy director of the Department of Environmental Protection’s water resource management division.
But for environmental groups, the story is less about success than it is about coping with the state’s bitter, ongoing legacy of phosphate mining and fertilizer production on thousands of acres of land in Southwest and Central Florida.
In 2001, Piney Point looked like it might become the state’s biggest environmental disaster. Mulberry Corporation had abandoned the property with highly acidic water stored precariously behind berms of radioactive phosphogypsum — the two by-products of turning phosphate rock into phosphoric acid for fertilizer.
Making matters worse, a tropical storm that year dumped 19 inches of rain over the property. The berms holding the acid water began to pit and erode. Three more inches of rain, and the toxic water would have breached the berm and spilled into nearby Bishop Harbor, a shallow estuary of Tampa Bay.
In emergency mode, the state made some tough, costly and controversial decisions to prevent a cataclysmic disaster.
Among the most controversial, the U.S. Environmental Protection Agency permitted the state to dump 500 million gallons of fertilizer process water into the Gulf after treatment and and neutralization. About 248 million gallons were dumped 100 miles offshore in the summer and fall of 2003. The water was considered too high in nutrients — these enhance algal blooms — to release into Bishop Harbor.
Later, the state treated the remaining waste water for direct disposal into the harbor, using portable reverse-osmosis filters.
The new owners are optimistic about the future of Piney Point as Eastport Terminal, a distribution center that will feed off the expansion of the Port of Manatee this year, said manager Jeff Barath.
Barath first stepped on the property in 2003 as an environmental compliance consultant working for DEP. His first reaction was “what a mess.” Now he sees opportunity in the revived landscape, a rare break in the norm where tarnished land is simply covered and left to sit unused.
Piney Point still contains mountains of phosphogypsum that must remain untouched and covered in grass. The gypsum is acidic and too radioactive to be used for other purposes, such as roadfill or wallboard.
But not all of Piney Point is marred. It also has undeveloped acreage ideal for industry. Its location across from the port and close to two major interstates makes it ideal for distributing international goods, Barath said.
HRK bought the 680-acre property for $4.3 million in 2006. While the state took responsibility for most of the cleanup, HRK contributed $3.8 million. The company also must maintain the phosphogypsum stacks indefinitely, at an estimated cost of $250,000 annually, as about 100 million gallons of acidic wastewater evaporates or is treated and drained.
The DEP lined the reservoirs that once held toxic water with rugged plastic to keep contaminants out of the groundwater. The lined reservoirs will be used to store dredge waste from the port expansion and will eventually be capped.
HRK cleared the site of decaying infrastruction, recycling the metal to pay for cleaning up the old factory.
The property also came with industrial infrastructure — plumbing to electric — and industrial use allowances, including permits for 390 truck trips on site per day.
Art Roth, in the fertilizer marketing business for 61 years, was the catalyst behind the sale. When Manatee said it was not interested in buying the property, Roth notified investors he knew who specialized in turning around troubled property.
Three investors formed HRK and Roth was appointed the company’s local representative. “It’s not pretty, but it’s industry,” Barath said. “It’s a perfectly engineered industrial facility.”
A large portion of the $144 million the state paid for cleaning up the site came from taxes paid into a trust fund by the phosphate industry. But those funds were intended for restoring land that was mined before 1975, when environmental laws requiring restoration went into effect. Piney Point diverted about $50 million of the funds, setting back progress on other projects. Also, the state Legislature spent money from the general fund.
The trust fund now holds about $47 million and mine reclamation is back on track with about $23 million in projects ongoing.
The Piney Point fiasco prompted legislative change in 2005. To shield taxpayers from being saddled with another Piney Point, phosphate companies must report their finances quarterly to the DEP and keep enough in savings to cover the cost of closure.
But some still worry that laws aren’t strict enough, and that the savings required aren’t enough to avoid the same type of disaster.
“It’s a wait-and-see and keep your fingers crossed that the next company doesn’t go belly-up and walk away,” said Glenn Compton, president of the local environmental group Manasota-88.

Scott names development exec. as top Fla. planner
http://www.miamiherald.com/2011/01/05/2002403/scott-names-development-exec-as.html
By BILL KACZOR

Associated Press
TALLAHASSEE, Fla. — Gov. Rick Scott named a development company executive as Florida’s next planning chief Wednesday and brought Kurt Browning out of retirement to again serve as secretary of state.
Scott also announced that Michelle Rhee, known for firing teachers who got poor appraisals when she headed Washington, D.C.’s school system, will continue as his informal education adviser.
A day after taking office, the new Republican governor appointed Billy Buzzett as secretary of the Department of Community Affairs. He comes from The St. Joe Company, one of Florida’s largest private landowners, where he was vice president of strategic planning.
Buzzett’s appointment predictably won applause from the business sector, but it also drew praise from an environmental leader.
“That’s actually a good thing,” said Audubon of Florida executive director Eric Draper. “I’ve walked the woods with him. I know he has a personal feeling for the specialness of Florida’s environment.”
Buzzett’s marching orders include advising Scott on how to align the planning agency’s functions with those of other state agencies. Scott noted in a news release that Buzzett served on a transition team that recommended merging Community Affairs with the departments of Transportation and Environmental Protection.
It’s an idea environmentalists oppose because they fear it would dilute protection of Florida’s natural resources, but Draper predicted it would be a nonstarter in the Legislature.
During his campaign, Scott accused Community Affairs, which is responsible for enforcing Florida’s growth management laws, of inhibiting development and being a job-killer.
“Billy is focused on helping me make government smaller, less intrusive and consistent with efforts to increase investments in Florida and spur job creation,” Scott said in a news release.
Buzzett will replace Tom Pelham, who fired a parting shot at Scott and other critics Monday by saying it’ll take decades to use up development capacity the department has approved over the last four years under ex-Gov. Charlie Crist.
Pelham’s final report shows the department has approved planning amendments that will permit more than a million new housing units and 2.7 billion square feet of nonresidential construction. Pelham said some local plans were revised because they failed to provide for roads, utilities and other infrastructure or allowed construction in inappropriate places.
Florida Chamber of Commerce president and CEO Mark Wilson said Buzzett’s appointment is “fantastic news for us.” He said it’ll encourage major developers who shunned Florida because of the department’s policies to take another look at the state.
Wilson said he anticipates a reversal of the focus on funneling growth into urban areas and open rural areas to development needed to accommodate a predicted growth in Florida’s population by two million people over the next decade.
“That’s where smart growth can happen and needs to happen,” Wilson said. “We don’t have room for them in the cities.”
Scott has spoken often of seeking outsiders like himself, but Buzzett is a familiar face in Tallahassee. The attorney worked for the Legislature, was Gov. Bob Martinez’s general counsel and served as an administrative law judge and executive director of the 1998 Constitution Revision Commission before going to work for St. Joe.
Browning retired last May, as required by the Deferred Retirement Option Program, which lets top employees draw retirement benefits as well as a full salary. He can be reappointed, though, after sitting out at least six months.
Rhee, who advised Scott during his transition, said in a statement that she was proud to work with leaders who support holding schools and teachers accountable for student achievement.
“Florida is leading the country in areas such as information about school performance, and we look forward to helping Gov. Scott push the envelope in promoting innovative policies,” Rhee sai

Read more: http://www.miamiherald.com/2011/01/05/2002403/scott-names-development-exec-as.html#ixzz1AISlm0Bi