Interesting Russian EuroChem-Louisiana transaction
By Tom Aswell
What should Louisiana citizens know about a $12 million real estate deal in Iberville Parish between the Louisiana Department of Economic Development (LED) and a Russian Oligarch involving a proposed fertilizer plant on property surrounding a Louisiana National Guard facility?
Apparently nothing, if one judges from the status updates coming from the Jindal administration since the deal was made back in June of 2013.
Throw in a curious buy-back clause contained in the agreement between the state and EuroChem Louisiana LLC, an option for EuroChem to purchase a second tract in St. John the Baptist Parish, and talk about environmental emission credits that were supposedly promised to Eurochem but then appear to have evaporated into…well, thin air, and you have the makings of political intrigue with an international flavor.
Readers may remember our post last October 20 in which we revealed what appeared to be a sweetheart deal between the state and Vantage Health Plan whereby Vantage was allowed to purchase the former Virginia Hotel in Monroe for $881,000 without having to bother with a pesky public auction and sealed bids.
That transaction was made possible (even though there was another party interested in purchasing the building that had been serving as the State Office Building in Monroe) by Senate Bill 216 (SB 216) by Sens. Mike Walsworth (R-West Monroe), Rick Gallot (D-Ruston), Neil Riser (R-Columbia), and Francis Thompson (D-Delhi).
Well, it turns out there was considerably more to SB 216 (which became Act 127 upon the signature of Gov. Bobby Jindal). We saw the bill in its entirety at the time we wrote our story last October but did not understand the significance of a part of the bill entitled Section 3.
Section 3 called for the sale of 2,150 acres of land within the town of St. Gabriel in Iberville Parish to a then unidentified “business entity that enters into a cooperative agreement” with the Department of Economic Development.
Not only was the prospective buyer not named in the bill (contrary to the other part of the bill that clearly identified Vantage Health and the purchase price of the Virginia Hotel), but the bill also contained no mention of a purchase price for the Iberville property. Neither the name EuroChem nor a purchase price is contained anywhere in the bill.
It is understandable that the buyer’s name might be left out of the bill, especially if the sale is still pending and nothing has been finalized. But when considering a proposal to dispose of a 2,150-acre tract of property for industrial purposes, one might be reasonably expected to ask how much money is involved before casting a vote on such a measure.
The bill passed the House by a 96-1 vote and by a 31-1 vote in the Senate. Voting against the bill in the House was Rep. Marcus Hunter (D-Monroe) while the lone dissenting vote in the Senate was cast by Sen. Dan Claitor (R-Baton Rouge). Seven senators and eight House members were absent or did not vote.
The Senate vote was on April 24, 2013, and the House approval followed on May 22. Gov. Bobby Jindal signed the bill on June 5 and the cooperative endeavor agreement was signed on June 14 by LED Deputy Secretary Steven Grissom—even though the bill did not become law until Aug. 1, 2013.
Russia’s EuroChem Wins $750M Loan For Potash Development
Law360, New York (September 04, 2014, 5:16 PM ET) — Russian fertilizer company EuroChem said Wednesday it signed an eight-year, $750 million loan facility from a syndicate of Russian and European banks to finance its Usolskiy potash project being undertaken at one of the world’s largest deposits.
Moscow-based EuroChem is developing the first phase of its Usolskiy project in Russia’s Verkhnekamskoe deposit in the Perm region, marking the company’s second potash project. Potash is a form of potassium used to make fertilizer. It is also used in soap, glass and ceramics manufacturing.
“This facility is a landmark for EuroChem, as it secures funding for one of our strategic projects and releases operating cash flows for other strategic investments,” EuroChem Finance Director Alexander Gavrilov said in a statement
Lead arrangers included Credit Agricole CIB, HSBC Bank PLC, ING Bank N.V., OJSC Rosbank, Sberbank CIB, Societe Generale SA and ZAO UniCredit Bank, with Societe General acting as both facility and security agent. No U.S. banks were on the list.
The action comes while financing from Western institutions to Russian businesses has been increasingly sparse in retaliation for the Moscow government’s support of pro-Russian separatists in the conflict in Ukraine. Sanctions began with simple freezes on individuals directly involved in the strife, but further deterioration in the region has pushed both U.S. and European governments to begin taking aim at significant slices of the Russian economy.
EuroChem said the loan documents were signed Aug. 26. Media reports indicate the loans were in the pipeline before Western lenders began scaling back. The company said it is not worried about Ukraine tensions dimming its economic prospects.
“None of our employees, shareholders or beneficiaries appear on any lists of sanctioned individuals, be that in connection with the Ukraine crisis or otherwise, which we believe should continue to be the case,” Olivier Harvey, head of investor relations at EuroChem, told Law360. “We also believe that EuroChem is an attractive client by any measure for any financial institution, and intend to continue staying that way.”
Eurochem said Verkhnekamskoe is one of the most technologically advanced greenfield projects in the industry, with capacity of up to 2.3 million tons. After a second phase of the project, which includes construction of an additional skip shaft, the site’s annual capacity will increase to 3.7 million tons.
“One of a handful of project finance exercises in Russia, this milestone facility provides our potash project with long-term funding, while keeping EuroChem’s overall borrowing capacity and credit profile intact,” Gavrilov said.
EuroChem estimates it has mining rights on proven and probable reserves of about 2.5 billion tons of ore to feed its Usolskiy operations.
The company, which focuses on nitrogen and phosphate fertilizer production and says it ranks among the top 10 global fertilizer companies, reported $5.6 billion in revenue in 2013 and employed more than 22,000 workers.
EuroChem bought $947.2 million in fertilizer assets from German chemicals giant BASF SE in 2011. The acquisition marked a big expansion for EuroChem, which absorbed about 330 BASF employees in Antwerp, Belgium, where BASF had plants for calcium ammonium nitrate, ammonium nitrate and nitrophosphoric acid.
Counsel information on the loan was not immediately available.