Hieronder het persbericht van Fitch dat Fertiglobe HOGER kan gaan waarderen na de overname door ADNOC. Interessant voor OCI aandeelhouders is vooral dat Fitch de overname als strategisch belangrijk voor ADNOC ziet, wat de kans van slagen van de overname uiteraard vergroot.
Fitch Ratings - Barcelona - 06 Feb 2024: Fitch Ratings has placed Fertiglobe Plc's 'BBB-' Long-Term Issuer Default Rating (IDR) and senior unsecured rating on Ratings Watch Positive (RWP) on the pending acquisition of a majority stake by Abu Dhabi National Oil Company (ADNOC) from OCI N.V. (OCI, BBB-/Rating Watch Negative; RWN).
The RWP reflects our expectations that Fertiglobe will have medium strategic importance for ADNOC, which will likely result in an upgrade of the IDR by one notch, i.e. incorporation of a one-notch uplift from Fertiglobe's Standalone Credit Profile, in accordance with Fitch's Parent and Subsidiary Linkage Rating Criteria. This further assumes that Fertiglobe will retain a financial structure commensurate with an investment-grade rating, despite a possible change in its financial policy.
The IDR reflects Fertiglobe's strong cash flow generation from young assets that are strategically located to serve global ammonia and urea markets and its competitive gas cost. Other rating strengths are its high margins and strong financial profile, which the company should be able to support despite gradual investments in developing blue and green ammonia.
We will resolve the RWP upon closing of the acquisition by ADNOC of a majority of Fertiglobe's shares, considering any subsequent changes in strategy or financial policy, which may take more than six months.
KEY RATING DRIVERS
Medium Strategic Incentive for ADNOC: We believe that Fertiglobe will be strategic in ADNOC's diversification and decarbonation strategy due to the prospects of ammonia use as a hydrogen carrier. ADNOC has earmarked USD23 billion to invest in and develop lower-emissions solutions and reach its net zero target by 2045. In addition, ammonia demand could multiply in the long term if used as a fuel or hydrogen carrier. In our view, this will balance Fertiglobe's small size within ADNOC, leading to an overall medium strategic incentive to support. However, we expect legal and operational incentives to support will be low.
Gas Contracts Support Margins: Competitive gas cost under long-term contracts provides a competitive advantage that ensure high margins for Fertiglobe through the cycle. Its adjusted EBITDA margin peaked at 55% in 4Q21 and bottomed-out at a still-strong 38% in 3Q23 as ammonia and urea went from all-time highs to troughs. The current structure of contracts places its assets in first or second quartile of global cost curves, ensuring profitable operations even when global prices are low, and capturing high margins when marginal producers' feedstock cost increase in greater proportions, as seen in 2021-2022.
Algerian Contract Uncertainty: Fertiglobe has yet to reach a new pricing agreement for gas in Algeria, which could influence the profitability of an asset that represents about one-third of total capacity.
Complex Profit-Sharing Structure: Fitch's EBITDA-based metrics capture dividend leakages to the minority shareholder of consolidated subsidiaries. In Algeria, a scheme provides the partner, Sonatrach, with a higher share of dividends than its 49% stake in the entity. This is booked as a cost in EBITDA, but the cash flow materialises in the following year when the dividend is paid. This distorts Fitch's leverage metrics due to the timing difference and calculation complexity. It also leads to cash-build up that will not be fully available for Fertiglobe, supporting Fitch's focus on gross debt metrics.
In 2023, the delayed payment of a USD813 million dividend to Sonatrach will greatly distort financial metrics, but should be viewed alongside the conservative leverage ratios in FY22 and over 2024-2027.
Conservative Financial Structure: Fertiglobe's current financial policy aims to balance a commitment to an investment-grade rating, with the optimisation of excess cash flow returns to shareholders. EBITDA gross leverage deteriorated in 2023 due to weaker performance, and higher dividends to minorities than we expected. This led to an increase of gross debt to about USD1.5 billion compared with mid-cycle EBITDA (after distributions to minorities) of about USD640 million based on our price assumptions.
We now expect EBITDA gross leverage to slightly exceed the negative rating sensitivity of 2x in 2024 and 2025 before returning to 1.7x in 2026 and 1.5x in 2027. However, we believe that the dividend policy could change as ADNOC gains majority ownership but expect the company to maintain strong credit metrics.
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Assets Concentrated in MENA: Fertiglobe's assets are located in Abu Dhabi (AA/Stable), Egypt (B-/Stable) and Algeria. The latter two jurisdictions have a higher risk of political and economic instability, but minority shareholders are government-related entities with incentives to ensure the viability of these assets. Fertiglobe operates eight production lines across MENA, which helps mitigate the risk of industrial footprint concentration.
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DERIVATION SUMMARY
Fertiglobe's peers include CF Industries, Inc (BBB/Stable), The Mosaic Company (BBB/Stable), ICL Group Ltd (BBB-/Stable), OCP S.A. (BB+/Stable) and OCI N.V. (BBB-/RWN).
Fertiglobe is smaller than all of its peers in absolute EBITDA terms, but has EBITDA margins comparable with CF Industries and higher than other peers. Similar to CF Industries and OCP, Fertiglobe's revenue is restricted to single-nutrient fertilisers, with a potential small contribution from diesel exhaust fluid sales, whereas ICL and Mosaic benefit from the sale of multi-nutrient fertilisers and OCI's downstream methanol sales increase revenue diversity. Fertiglobe's industrial footprint is less diversified than its peers and is located in jurisdictions with higher country risk.
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LIQUIDITY AND DEBT STRUCTURE
Robust Liquidity: As of 30 September 2023, Fertiglobe had cash balances of USD1.6 billion, before the payment of a USD813 million dividend to a minority shareholder of its Algerian subsidiary in 4Q23. Fertiglobe raised a new five-year USD500 million term loan in 4Q23, which has repaid the draw-down on the USD600 million revolving credit facility that is available until 2027. This provides a comfortable liquidity position until the next material maturity of USD300 million in 2026.
ISSUER PROFILE
Fertiglobe is the largest seaborne exporter of urea and ammonia with production facilities in Abu Dhabi, Egypt and Algeria.