latest news release
POTASH CORPORATION OF SASKATCHEWAN INC. ANNOUNCES GERMAN
POTASH INDUSTRY INVESTMENT
SASKATOON, Dec. 9 /CNW/ - Potash Corporation of Saskatchewan Inc. (PCS)
announced today that it has agreed to purchase from Guano-Werke GmbH, a 100
percent subsidiary of BASF AG, 51 percent of the outstanding shares in the
German publicly traded company Kali und Salz Beteiligungs AG (K&S AG). PCS has
agreed to pay DM 250 million (approximately US$ 164 million). PCS will fund
the purchase of the shares with cash obtained from either its existing cash or
borrowing under its existing Credit Facility.
The principal holdings of K&S AG include a 51 percent interest in Kali
und Salz GmbH and a 50 percent interest in Potash Company of Canada Limited
(Potacan). Kali und Salz GmbH is the owner and operator of Germany's potash
mines. It has two salt mines in addition to six potash mines. Potacan owns and
operates a potash mine near Sussex, New Brunswick, where PCS already has a
mine.
Upon the closing of the purchase BASF AG will continue to hold 25.4
percent of the outstanding K&S AG shares and the remaining 23.6 percent will
continue to be widely held and publicly traded in Germany. As part of the
agreement, PCS has a call option to purchase the remaining K&S AG shares held
by BASF at any time before January 1, 2000 at a price of DM 124.8 million.
Under the purchase agreement, the closing of the transaction is subject
to certain conditions including meeting regulatory requirements in relevant
jurisdictions including Germany, Canada, and the United States. Closing is
anticipated to occur in the first quarter of 1997.
``This acquisition will mesh well with PCS,'' stated C. E. Childers,
Chairman, President and Chief Executive Officer. The German connection will
give us another supply point for our global potash enterprise with sales in
Europe, India and Latin America that nicely balance ours, which are focused on
North America and Asia.''
K&S AG, the former West German potash company, merged its mines with
those of MDK, the state-owned company of former East Germany, in 1993, after
Germany was unified. The result was Kali und Salz GmbH, which is owned 51
percent by K&S AG and 49 percent by an agency of the German Government. Since
that time, the mines of Kali und Salz GmbH in the former East Germany are
being modernized and remediated in a program targeted for completion by the
end of 1997.
Total capacity of Kali und Salz GmbH after the modernization program is
expected to be over 8 million tonnes of potash and other potassium based
fertilizer products, making it the fourth largest producer of such products in
the world. With a muriate of potash capacity of 4.5 million tonnes it is the
largest potash supplier in Europe. It is also the largest supplier in the
world of potassium sulphate (K2SO4) and water-soluble magnesium sulphate
(MgSO4). The mines have ample reserve lives; all but two have at least 40
years. Kali und Salz GmbH had 15 percent of world potash sales in 1995; the
same as PCS.
K&S AG has several subsidiary businesses which support or are associated
with production and sale of fertilizer, including a transportation subsidiary
and a waste management business utilizing both operating and closed mines for
waste storage. It also has the capacity, through Kali und Salz GmbH, to
produce 3.5 million tonnes of sodium chloride annually.
When converted to U.S. GAAP, K&S AG, on a consolidated basis, had a gross
margin of US $154 million in 1995 on sales of US $932 million. Its EBIT was
US $37.6 million with a net income of US $15.8 million.
Through K&S, PCS will be well positioned in Western Europe. It will also
be ideally situated to respond to the expected growth in demand for potash in
Central and Eastern Europe as the economies of those nations improve.
Childers concluded by saying, ``We expect that our expertise as one of
the world's leaders in potash production and sales can and will be beneficial
to the German operations. We share the German goal of making their mines as
efficient as possible to increase their competitiveness in world markets. We
know that major steps are being taken in staffing, modernization,
diversification, environment, improved maintenance and safety since the two
industries were combined. We expect more improvements of this sort going
forward.''
Potash Corporation of Saskatchewan Inc. is the world's largest potash
company by capacity and the world's third largest phosphate producer. PCS is
currently in the process of seeking to acquire Arcadian Corporation, the
western world's largest nitrogen producer. The shareholders of Arcadian are
expected to vote on the PCS offer in early 1997. The successful completion of
these acquisitions will make PCS the world's largest fertilizer company
producing all three primary plant nutrients.
Kali und Salz AG
Selected Financial Data
(in Millions)
unaudited
Sept 30,1996 Sept 30,1996 Dec. 31,1995 Dec. 31,1995
(nine months) (nine months) (year) (year)
DM US$ DM US$
Net Sales 1,124.8 738.3 1,421.0 932.7
Gross Margin 211.4 138.8 234.8 154.1
EBITDA 193.4 126.9 167.9 110.2
EBIT 77.9 51.1 57.3 37.6
Net Income 48.3 31.7 24.0 15.8
EPS 9.65 6.33 4.80 3.15
(in actual units of
currency)
Current Assets 1,395.9 916.2 1,506.8 989.0
Fixed Assets 857.9 563.1 884.0 580.1
Total Assets 2,253.8 1,479.4 2,390.8 1,569.1
Current Liabilities 421.1 276.4 467.5 306.8
Deferred Liabilities 1,230.1 807.4 1,383.3 907.9
Minority Interest 170.8 112.1 154.1 101.1
Shareholders Equity 431.8 283.4 385.9 253.3
Total Liab. & Sh Eq 2,253.8 1,479.4 2,390.8 1,569.1
------------------------------------------------------------------------
Sales Volume 000's Tonnes 000's Tonnes
Potash & Other 5,878.0 7,358.0
Fertilizers
Salt 2,393.0 3,127.0
NOTE: Exchange Rate (DM/US$) 1.52
Outstanding shares 5.0 million
All financial information is represented in accordance with U.S.
GAAP
For further information: Betty-Ann Heggie, Senior Vice President, Corporate Relations, (306) 933-8521
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