Friday, February 4, 2011

IFR-Mosaic to target sovereign wealth funds

by Stephen Lacey

NEW YORK, Feb 3 - The Mosaic Company is preparing to sound out sovereign wealth funds to elicit participation in the initial phase of a secondary stock sale that is expected to total US$8bn-$12bn.

The sounding effort, which is expected to begin in late February, is designed to build an initial base of support for what figures to be one of, if not the, largest transactions of the year, according to two sources close to the process.


JP Morgan and Credit Suisse have been mandated as global coordinators on the initial sale of up to 157m shares. The initial sale is tentatively timed for April or May and is designed to increase Mosaic's <MOS.N> free float from 36% currently to above 50%, allowing the fertiliser producer to qualify for inclusion in the S&P 500 Index - a full sale of all the 157m shares would increase the free float to 73%.

Last month, privately-held Cargill and Mosaic announced plans to sell off of the entire 64% stake. Of the 157m shares to be sold in the initial, "formation" sales Cargill debt holders were to agree to exchange their positions for 107m shares, with charitable trusts agreeing to sell 50m shares.

The "formation" offerings are to occur over 15 months within closing the split-off: one in the second quarter, followed by a second sale six to nine months later. The remaining roughly 129m shares could be sold in three equal installments beginning 2.5-years after the initial closing.

The split-off is conditioned upon approval by Mosaic's existing shareholders. At the time of the initial announcement on January 18, Mosaic said it would file a proxy statement by early February, with a vote to follow about one month after that.

The proxy statement has not been filed with the SEC.

Mosaic spokesperson Rob Litt said that there is no change in the time-line for the split-off. He declined comment on any details associated with marketing of the stock sale, including the potential of targeting sovereign wealth funds.

The decision to sound out sovereign wealth funds is motivated, at least in part, by recent political unrest tied to rising food prices, according to one of the sources.

Fertilizer prices, which skyrocketed to historic highs in 2008, are beginning to rise.

Mosaic has committed to spend US$1.2bn-$1.4bn this year on capital expenditures targeted at boosting production, including expanding potash production at three Canadian mines.

(Stephen Lacey is U.S. Editor of International Financing Review, a Thomson Reuters publication)

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