Iowa Fertilizer Company LLC (Iowa Fertilizer), a wholly owned subsidiary of Orascom Construction Industries (OCIC.CA), announced on Thursday that it has issued approximately US$ 1.2 billion of bonds to institutional and retail investors in the US tax-exempt market through the Iowa Finance Authority. The bond proceeds will be used to finance the cost to develop and construct a new US$ 1.8 billion greenfield nitrogen-based fertilizer complex in Wever, Iowa, representing the largest investment in Iowa's history. The facility is the first world-scale nitrogen fertilizer facility to be constructed in the United States in more than 20 years and will produce up to 2.0 million metric tons of urea ammonium nitrate (UAN), urea, ammonia and diesel exhaust fluid (DEF) annually upon completion. The plant is expected to begin production during Q4 2015. The bond issuance transaction is rated BB- by both Standard & Poor's (S&P) and Fitch and represents the largest non-investment grade transaction ever sold in the US tax-exempt market. This successful transaction was well-received in the market with US$ 3.5 billion of orders from more than 75 major institutional investors. Many of the largest fixed income money managers in the world participated in the transaction, including tax-exempt mutual funds, insurance companies and hedge funds. Given the strong market reception, the interest rate was reduced by up to 10 basis points, resulting in an average interest rate on the bonds of 5.12%. The structure of the transaction was the following: - US$ 390 million term bonds maturing in 12/01/2019 yielding 4.8% - US$ 366 million term bonds maturing in 12/01/2022 yielding 5.1% - US$ 429 million term bonds maturing in 12/01/2025 yielding 5.3% OCI Chief Executive Officer Nassef Sawiris commented, "We are pleased with the market's reception for the bonds as evidenced by the strong orders from global fixed-income money managers. The bond's over-subscription is further affirmation of the Iowa Fertilizer long-term value proposition, utilizing low cost natural gas to develop fertilizer and DEF production in the heart of the US Corn Belt. The bond execution represents a major milestone for Iowa Fertilizer and we look forward to working closely with all parties involved on the project to commence production in late 2015." The transaction was underwritten by Citigroup Global Markets as senior manager and Bank of America Merrill Lynch as co-manager. Citigroup Global Markets also acted as the transaction bookrunner. Peter Bartlett, Managing Director of Citigroup Global Markets Inc. stated, "Citi is proud to have led the largest high yield deal in the history of the municipal market. In conjunction with OCI's senior management, Citi completed a comprehensive marketing campaign resulting in broad interest from more than 75 institutional purchasers. We believe that this transaction is an outstanding success for OCI, Citi's institutional clients, and the citizens of Iowa. This US$ 1.8 billion investment will benefit all of Iowa through job creation and a local source of fertilizer."
