Cargill Sheds Mosaic Stocks

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

Abandoned Gyp-Stack Reclaimed for Industrial Site at Port Manatee

Manatee’s environmental scourge recast as asset

Sarasota Herald Tribune

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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

Scott names development exec. as top Fla. planner

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

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DEP Appointment Sends Pro-Industry Message

Scott’s Appointment for DEP Chief Sends Pro-Industry Message
The Bradenton Times
Published Wednesday, January 5, 2011 3:00 am
by Dennis Maley

BRADENTON – When Rick Scott named shipbuilding executive Herschel Vinyard to be the new secretary of the Florida Department of Environmental Protection this week, deregulation proponents cheered. An attorney and part-time lobbyist, the BAE Systems executive used to represent clients accused of pollution violations. In other words, he’s made a good living arguing against the sort of regulations that the agency he will now head is charged with enforcing.

If this sounds shocking, it shouldn’t be. Scott ran on a platform of less government interference in the market place and as little industry oversight as possible. From allowing the Department of Community Affairs to sunshine, to talk of combining the DEP with the DCA and Department of Transportation, and even combining juvenile justice with children and families, Scott has revealed a desire to whittle government down to the smallest size possible — and a willingness to go to any lengths to do so. In fact, what might separate Scott from other governors most is his complete lack of political experience and the absence of a “well, you can’t actually do that” philosophy to such drastic changes.

However, his approach in selecting a DEP head is far from revolutionary. Hiring lobbyists and attorneys from the regulated industries to head a department’s oversight has been a popular tactic in recent years. President Bush regularly tapped such candidates to head agencies like Interior, Agriculture and the FDA. President Obama has relied almost exclusively on Wall Street vets and Federal Reserve Bank executives to monitor nearly every aspect of the banking crisis, TARP and even so-called reform. The argument used is that such professionals understand the practical implications of regulations best, but the end result is nearly always a quick and efficient gutting of any measures opposed by the industry, followed by a profitable return to the private sector they’ve just made so happy.

Predictably, Scott’s appointment, which still has to be confirmed by the Senate, was applauded by industry while being scoffed at by environmentalists. Neil Armingeon of the environmental group St. Johns Riverkeeper told the Miami Herald, “I’m almost at the point now where I’m not sure it matters who runs the agency, since the Scott administration plans to deregulate everything in Florida.” Whether Scott’s argument that such deregulation will yield massive investment and job creation or just turn the state into a giant landfill for a small handful’s profit remains to be seen

Former Environmental Lawyer Named Next Secretary of FDEP

Governor-Elect Rick Scott Names Herschel Vinyard as Secretary of the Department of Environmental Protection
CONTACT: Brian Burgess January 3, 2010 850-922-5130
TALLAHASSEE, FL – In his continued focus on protecting the natural resources of Florida, while creating the best possible mechanisms for job creation in the state, Governor-elect Rick Scott today appointed Herschel Vinyard as Secretary of the Department of Environmental Protection.
The appointment is subject to confirmation by the Florida Senate and the Florida Cabinet.
Vinyard, who also served as a member of Scott’s Economic Development Transition Team, has a deep background in environmental compliance and innovation, having practiced environmental law for nearly a decade, while more recently serving as director of business operation for BAE Systems Southeast Shipyards. This mix of legal expertise and service with a major Florida employer positions Vinyard to uniquely understand the need for strong environmental protection while ensuring that government and business find new ways to partner in growing the Florida economy.
“Herschel is a man of deep environmental knowledge and practical business experience. He has a love for our great state’s natural resources and a passion for job creation. He will effectively balance those interests for the benefit of all Floridians. We are fortunate to have recruited Herschel from the private sector into government service,” Scott said.
As an example of Vinyard’s focus on environmental responsibility and effective business practices, he provided counsel to BAE Systems in their recent, successful efforts to remove its treated wastewater outfall from the St. Johns River. That wastewater is now being used for irrigation purposes and eliminates a discharge to one of Florida’s most significant water bodies.
In addition, Vinyard led his company’s three-year effort to obtain state approval for a sovereign submerged lands lease. His experience in this complex regulatory proceeding provided Vinyard with new insights on the challenges businesses face in the permitting process and the need to provide a more efficient and streamlined mechanism to meet environmental requirements.
“Good environmental practices make good business sense. Not only can such stewardship better protect the resources around us, they often save money and lead to new innovation. Herschel has been on the front lines of such efforts and will ensure that Florida leads the nation in new partnerships between government and industry that save money, streamline processes and create jobs,” Scott said.
During his practice at one of Florida’s most well-respected law firms, Vinyard represented numerous clients in a myriad of complex environmental matters. His expertise includes the Resource Conservation and Recovery Act, the Clean Water Act and liability issues associated with the Comprehensive Environmental Response Compensation and Liability Act, as well as Florida’s statutory counterparts in Chapter 376 and 403. He is also a past chair of the environmental and land use law section of the Jacksonville Bar Association.
Vinyard is involved in a number of volunteer efforts associated with conservation and environmental protection. As an advisory committee member of the Northeast Florida chapter of the Trust for Public Lands, Vinyard helped develop a strategy to identify and acquire sensitive environmental lands. He serves on the Florida DEP’s Lower St. Johns River TMDL Executive Committee to assist in the development of a basin management action plan for that water body.
About Herschel Vinyard:
Vinyard has more than twenty years of experience in environmental law and business management. In his current role as director of business operations at BAE Systems Southeast Shipyards, Vinyard is responsible for strategic planning, business development and regulatory and government affairs. BAE is the world’s second largest defense contractor. He also serves on a number of professional and civic associations that draw upon his expertise in environmental and complex business practices. This includes board service on the Jacksonville Port Authority, the Jacksonville Regional Chamber of Commerce and the Manufactures Association of Florida. During his decade in private practice at Smith, Hulsey and Busey, Vinyard counseled clients in state and federal environmental compliance and permitting, was heavily involved in the siting of an electrical cogenerating facility and assisted in industry waste minimization efforts. He received his undergraduate and law degrees from Louisiana State University.

Phosphate worker saw six name changes at Bartow phosphate plant

The Lake Wales News

Retiring after all these years

PHOTO BY BILL RETTEW JR. Scott Marshall Smith (left) accepts an award for his 57 years of service at Mosaic Wednesday from Plant Manager Jeff Golwitzer. The Mosaic plant in Bartow had a retirement party for him.
Staff Writer
Saturday, January 1, 2011 10:06 AM EST
Most of more than 100 fellow employees raised a hand at Scott Marshall Smith’s retirement party to confirm that they were not yet born when he started working at Mosaic in Bartow.
The Lake Wales resident was around long enough to witness six name changes at Mosaic’s Bartow plant, one of the world’s largest producers of phosphate and potash.
Smith retired on the 57th anniversary of his hire date in 1953 to much fanfare and smiles from co-workers.
The plant once employed up to 1,200 employees, but thanks to technological improvements, now 373 workers toil at a 15 times larger plant.

Prior to automation, and since Smith started as a sulfuric operator testing and filtering sulfur, the 550-ton sulfuric acid plant has grown to three 2,500-ton sulfuric acid plants on the 100-acre site, surrounded by 10,000 acres of company owned reclaimed land and mines.
The retiree witnessed those technological changes first hand. The employees originally counted on pneumatic air tubes to help operate the plant. Now computers run the process.
When the 19-year-old started, safety glasses, steel toed boots and protective headgear were not required on the job.
“There was an operator for every little job,” said Smith, “and many jobs were combined into one.”
Plant Manager Jeff Golwitzer said the plant became much more productive and efficient during Smith’s tenure in order to compete with companies hiring overseas workers at lower wages.
“I just changed with the times,” said Smith. “I never did mind coming to work.

“If I did, I would have left.”
Before safety gear became mandatory, employees didn’t punch a time clock at the phosphate plant.
“We’d trade off if we needed some time off,” said Smith. “They were just happy we got the job done, no matter who did the work. We’d even sign each other’s names.”
Times also changed outside the workplace and in Polk County.
“People were more friendly,” said the 76-year-old. “You knew your neighbors much more then.
“We didn’t lock the house and left the car keys in the car, but you couldn’t do that now.”
Smith is married to Carolyn, father to Scott Jr., and grandfather to Scott III, Julie and Jonathan.
So why did the fisherman and clay target sportsman stay at one job?
At first he intended to get “a real job” when he turned the required 21 years old to work for the telephone or power company.
After working at Publix and for the school board, Smith started out earning $1.67 per hour at the phosphate plant.
“I was paid a fair wage and had job security and stability,” said Smith.
While Smith worked more than a half century at the same place, he’s not an atypical Mosaic employee.
The average employee at the Bartow plant has been on the job for 18 years and is 55 years old.
Hank Crowley worked with Smith.
“Sometimes you spend more time with the employees than you do with your family,” said Crowley.
Bill Scott is a 33 year vet at Mosaic.
“He’s like a fixture,” Scott said about Smith. “It’s kind of like having your family and your grandfather out here.”
Fellow employees seemed in awe of Smith’s endurance and fitness. Plant manager Golwitzer first met his co-worker in the on-site gym. Several fellow workers smiled when they talked about chasing Smith up the facility’s many stairways.
Bernie Kerber has worked with phosphate and Smith for 34 years.
“No way, I’m not in half as good shape,” said Kerber. Most who spoke said they hope to be as healthy when they choose to retire.
Golwitzer presented the retiree with several awards, framed photographs and presented a slide show.
“With his dedication and fortitude, he’s an inspiration for all of us,” said Golwitzer.

3PR News: Massive Sinkhole Opens in Lithia

The first radio reports I heard on this event is that the landfill was built on “a former phosphate mine” site. I don’t see any further reference to that fact in current reports….

Lithia is the regional headquarters of Mosaic.

Posted: 1:14 PM
Last Updated: 1 hour and 30 minutes ago

• By: Ellen McNamara
HILLSBOROUGH COUNTY, Fla. – Today, the Department of Environmental Protection plans to hold a meeting with Hillsborough County leaders to figure out how to fix a massive sinkhole under the Southeast Landfill in Lithia.
The last time we checked with Hillsborough County, the hole was about 60 feet deep.
Even before the meeting this afternoon, the DEP sent a letter to the Hillsborough County Solid Waste Management Department outlining what the county needs to do to ensure the groundwater is safe to drink.
The letter outlines eight different steps, and Michelle Van Dyke with Public Utilities, says the county is doing everything they have been told.
The DEP wants crews to take samples of water at different wells around the 3300 acre site. The samples have to be collected on a daily basis.
Workers also are required to monitor storm water and wells off site on private property near the landfill.
The gas collection system near the sinkhole has to stop operating, but other collection sites can continue working.
As for what caused the sinkhole, geologists working with the county say they are not sure.
Van Dyke says the Florida Aquifer, which flows 130 feet below the surface of the landfill, appears to be fine. The sinkhole formed on a mound about 45 feet above ground.
Copyright 2010 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Leaders look for solution to massive sinkhole
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