OCI confirms trona mine sale

On Monday, OCI Enterprises Inc., the North American subsidiary of OCI Company Ltd. (“OCI”) of Seoul, Korea, announced that it has signed a definitive agreement to sell its approximately 73 percent limited partner interest in OCI Resources LP (“OCI Resources” or the “Partnership”), as well as its 2 percent general partner interest and related incentive distribution rights, to Park Holding A.S., a subsidiary of Ciner Group of Istanbul, Turkey for $429 million.

OCI Wyoming employs about 430 people at the Green River facility and its annual soda ash production is 2.7 million metric tons.

About a month ago, a rumor of OCI’s sale was reported by Bloomberg Business on its website http://www.bloomberg.com, however even their article was vague. According to the brief article, which published June, 19, 2015, “OCI Enterprises Inc. is considering the sale of its controlling stake in a $1 billion soda-ash operation, according to people with knowledge of the situation. The company, based in Atlanta, has appointed Citigroup Inc. to explore options for its 51 percent holding in the asset located in Wyoming, said the people, who asked not to be identified because the plan hasn’t been made public yet.

Representatives for OCI and Citigroup declined to comment.”

This was all the website had to say.

According to OCI’s press release, following the transaction, OCI Resources will continue to operate as a publicly traded Master Limited Partnership with the current management team remaining with the Partnership. The transaction does not involve the sale or purchase of any OCI Resources common units held by the public.

The transaction is subject to customary closing conditions and regulatory approvals and is expected to close by the end of the third quarter 2015.

OCI Resources owns a controlling interest comprised of a 51 percent membership interest in OCI Wyoming LLC (“OCI Wyoming”), one of the largest and lowest-cost producers of natural soda ash in the world. Ciner Group, through its subsidiary, Eti Soda, operates a natural soda ash production facility in the world’s second largest trona ore bed located in Beypazarri, Turkey.

“We are really excited about our new strategic relationship with Ciner Group and their desire to help us expedite the growth of our MLP. We think there will be numerous opportunities to leverage their expertise to help us grow our cash flow,” OCI Resources President and CEO, Kirk Milling, said.

“Ciner Group is pleased to welcome OCI Resources to our family of companies. With its position in markets that are complementary to ours, OCI Resources brings solid operational and financial performance as well as industry-leading safety performance,” Ciner Group Chairman Turgay Ciner said.

In June 2015, OCI Enterprises Inc. announced it was evaluating strategic alternatives for its stake in OCI Resources.

Citi acted as financial advisor, Dechert LLP served as legal advisor to OCI Enterprises Inc. and White & Case LLP served as legal advisor to Ciner Group with the assistance of Regnum Solicitors acting as in-house legal advisor.

As for the name OCI, that too will change. OCI Resources will remain an autonomous unit within Ciner Group. The U.S. operations will be run independently, on a stand-alone basis. As for the name change, after the closing of the transaction, there will be a transitional period and the OCI name will still be in place. Ciner Group has not yet decided what the new name will be, but OCI will announce that as soon as it can.  

“We have not sat down with the buyer to have full discussions about future plans yet, but they have indicated that they don’t intend to make immediate changes to benefits and compensation,” OCI Site Manager Craig Rood said.

County Assessment

According to 2015 Sweetwater County assessments, OCI has the third largest trona operation in terms of equipment and fourth in production. OCI’s equipment was valued at $25.8 million while production was assessed at $85.7 million.

“Trona is vital to our economy,” Sweetwater County Assessor Pat Drinkle said. “It’s important.

Trona represents 19 percent of the county’s overall valuation as well as provides thousands of jobs for county residents.

During the past seven years, three of the four mines have gotten sold to other companies. Tata Chemicals purchased the General Chemical in Jan. 2008 while FMC sold its mine to Tronox earlier this year.

In Tata Chemical’s case, their $1.08 billion purchase was an investment to make the company the second largest soda-ash producer worldwide. Tata operates soda-ash facilities in India, the United Kingdom, Kenya and the United States.

For FMC, the sale of its Alkali Chemicals division near Green River was motivated by the company’s acquisition of Cheminova, a pesticide manufacturer, for $1.8 billion. The sale to Tronox, for $1.64 billion gave FMC cash to complete its Cheminova purchase.