PRESS: Lukoil, EuroChem offer $1 bln for fertilizer producer Ammoni

MOSCOW, Apr 9 (PRIME) -- Russian oil major Lukoil and fertilizer producer EuroChem are competing for the purchase of troubled fertilizer producer Ammoni in the republic of Tatarstan offering U.S. $1 billion, Kommersant business daily reported on Tuesday quoting sources.

Initially, there were other contenders, including fertilizer producer UralChem. Currently, Ammoni’s debt to VEB.RF stands at about 100 billion rubles.

Ammoni was established in 2016, with the core shareholders being Tatammoniy LLC with a 52.9% stake, VEB.RF with 22.8%, and Tatarstan’s investment venture fund with 24.3%. The company was valued at U.S. $2 billion in 2015, with VEB.RF raising the bulk of the money from Japanese banks. However, Ammoni failed to service loans properly due to a rapid depreciation of the ruble then.

Sources told Kommersant that the shareholders have been looking for an investor for a long time, and even wanted to sell 100% in the plant. The structure of the deal is unclear, and the owners will decide whether they will bankrupt the ammonia producer or bail it out until June. One source told the business daily that VEB.RF plans to bankrupt the plant, get 100% in it, and then sell the stake, while another source said that a legal bailout is possible.

Aton analyst Andrei Lobazov said that the condition of the ammonia market is tough, as FOB Black Sea prices have contracted to $270 per tonne recently from $350 per tonne in October–December 2018, and competition in the sector may become tougher this year after the launch of EuroChem’s large plant in Kingisepp.

VEB.RF declined to comment.

(65.3498 rubles – U.S. $1)

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