Hassan Badrawi, CEO of OCI Global:
“During the course of the third quarter and the quarter to date, OCI has achieved significant milestones in its strategic transformation. We announced the sale of OCI Methanol to Methanex for a consideration of USD 2.05 billion, and successively closed the sales of IFCo to Koch Industries for USD 3.6 billion, Fertiglobe to ADNOC for USD 3.62 billion, and Clean Ammonia to Woodside for USD 2.35 billion. These are remarkable achievements for the OCI team, further demonstrating our execution capabilities and our commitment to OCI’s strategic roadmap for value creation. We believe these transactions provide highly valuable liquidity for significant capital returns to shareholders as a priority, alongside future investment capacity.
Following these milestones, OCI will pay an interim extraordinary distribution of EUR 14.50 per share in aggregate (~USD 3.3 billion) on 14 November 2024 to shareholders of record as of the close of business on 29 October 2024. The distribution will be made as a repayment of capital or, at the election of the shareholder, as a payment from the profit reserve. This brings total distributions to OCI shareholders in the past four years to USD 5.4 billion. Looking back at our history as a listed vehicle since 1999, OCI has returned more than USD 20 billion to its shareholders via buybacks, share and cash distributions, representing an IRR of approximately 40%. We will continue to build upon this track record and seek to deliver sustainable value creation for our shareholders, partners and employees.
OCI expects to make an estimated further extraordinary distribution of approximately USD 1 billion through a repayment of capital during H1 2025. This will be subject to continued progress on the execution of the announced transactions and the strategic review.
Finally, we were deeply impacted by the tragic incident in early October at the Beaumont Clean Ammonia site, which resulted in the death of a subcontractor. The safety and well-being of all employees and contractor employees is of paramount importance to OCI, and we are cooperating fully with the local authorities to investigate and understand the circumstances regarding the incident. Our thoughts and deepest condolences remain with our colleague’s family, friends, and local communities.”
Key Financial Highlights
- Continuing Operations Adjusted EBITDA for Q3 2024, which now solely includes European Nitrogen and Corporate Entities, showed a similar small loss to Q3 2023:
- Notwithstanding improved sales volumes, margins at European Nitrogen were negatively impacted by higher natural gas pricing, higher EUA provisions and other costs.
- The weaker comparative performance within European Nitrogen was partially offset by lower Group costs and eliminations.
- Given the recent divestments, the current corporate cost base of Continuing Operations does not yet fully reflect the reduced scope and scale of OCIs continuing business. OCI continues to make substantial progress in right-sizing its corporate cost base to better serve the current structure and scale of the business. OCI expects to beat its previously guided target of USD 30 – 40 million of run-rate corporate costs by 2025.
- Within Discontinued Operations, adjusted EBITDA for OCI’s Methanol business showed a marked improvement year-on-year reflecting increased methanol and ammonia prices, reduced natural gas costs, and robust operational performance.
- Net cash from Continuing Operations stood at USD 1,855 million as of 30 September 2024 compared to a net debt position of USD 2,194 million as of 30 June 2024[1]. The end-Q3 net cash position precedes closing of the Fertiglobe transaction and payment of the announced EUR 14.50 extraordinary distribution.
Key Strategic and Business Highlights
- Effective 15 October 2024, Mr. Hassan Badrawi was appointed Chief Executive Officer (CEO) of OCI, previously OCI’s Chief Financial Officer (CFO) and a 23-year OCI veteran. Mr. Beshoy Guirguis assumed the role of CFO of OCI, formerly OCI’s Vice President of Global Growth and Transformation, and CFO of OCI US Nitrogen, after joining OCI in 2010. Concurrently, Mr. Ahmed El-Hoshy stepped down as CEO of OCI and continues in his full-time role as CEO of Fertiglobe.
- In September 2024, OCI announced that it had entered into a binding equity purchase agreement for the sale of 100% of the equity interests in its global methanol business (“OCI Methanol”) to Methanex Corporation (“Methanex”) for a purchase price consideration of USD 2.05 billion on a cash-free debt-free basis. The transaction is expected to close in H1 2025. Following the announcement of the sale of OCI Methanol, OCI repurchased its 11% and 4% minority stakes in OCI Methanol from Alpha Dhabi Holding PJSC and ADQ, respectively.
- On 5 August 2024, OCI entered into a binding equity purchase agreement for the sale of 100% of its equity interest in the Clean Ammonia project currently under construction in Beaumont, Texas (“OCI Clean Ammonia” or the “Project”) to Woodside Energy Group Ltd (“Woodside”) for a purchase price consideration of USD 2.35 billion on a cash-free debt-free basis, following a competitive process. On 30 September 2024, OCI announced the successful closing of the transaction with the receipt of 80% of the proceeds or approximately USD 1,880 million plus a USD 20 million adjustment for certain pre-paid expenses, and a deferred consideration of 20% or approximately USD 470 million to be received at Project Completion[2], expected in H2 2025. OCI will continue to manage the construction, commissioning, and start-up of the facility through Project Completion and has a financial obligation to pay for the remaining capital expenditure and costs to Project Completion. Construction is well advanced today with USD 799 million cash spent as of 30 September 2024 (including both historical capital expenditure and certain pre-operating expenses). OCI expects a total investment cost through Project Completion of approximately USD 1.55 billion, including contingencies.
- On 29 August 2024, OCI announced the successful completion of the sale of 100% of its equity interests in Iowa Fertilizer Company LLC (“IFCo”) to Koch Ag & Energy Solutions (“KAES”). The transaction was valued at USD 3.6 billion on a cash-free debt-free basis and followed a competitive process. Net proceeds received by OCI amounted to approximately USD 2.6 billion, after adjusting for bond defeasance, mark to market on outstanding hedges, and other transaction related costs.
- On 15 October 2024, OCI announced the successful completion of the divestment of its majority stake in Fertiglobe to Abu Dhabi National Oil Company P.J.S.C. (“ADNOC”). The gross transaction consideration of USD 3.62 billion on a cash-free debt-free basis was impacted by USD 70 million in various closing adjustments and is further subject to any materialization of certain indemnifications agreed as part of the transaction that will only become quantifiable in due course.
- The expected cumulative crystallization of approximately USD 11.6 billion of gross transaction proceeds from four transactions affords OCI significant flexibility to deliver on its capital allocation priorities, including deleveraging at a gross level as well as returning a meaningful quantum of capital to shareholders:
- All OCI NV bank debt has now been repaid, including the revolving credit facility and bridge facility utilized during the transition period. Total debt repayment in Q3 2024 amounted to USD 1,019 million. The USD 698 million 2025 Senior Secured Notes were redeemed at par on 15 October. Remaining cash proceeds have been invested whilst OCI NV currently retains gross debt of USD 600 million in the form of its 2033 bonds, which may provide optionality and strategic flexibility as part of a longer-term future capital structure, to be decided.
- Following the successful completion of the Fertiglobe and IFCo transactions, OCI will pay an interim extraordinary distribution of EUR 14.50 per share in aggregate (~USD 3.3 billion) on 14 November 2024 to shareholders of record as of the close of business on 29 October 2024. The distribution will be made as a repayment of capital or, at the election of the shareholder, as a payment from the profit reserve.
- OCI expects to make an estimated further extraordinary distribution of approximately USD 1 billion through a repayment of capital during H1 2025. This will be subject to continued progress on the execution of the announced transactions and the strategic review.
- With regards OCI’s strategic review, the Company is actively engaged in the evaluation of strategic alternatives for its continuing businesses. Any future decisions will be made in the best interests of all shareholders.
Conference call details
A conference call for investors and analysts will be hosted on Tuesday, 12 November 2024 at 3:00 PM CET (2:00 PM GMT, 9:00 AM ET).
- Investors and analysts can access the call and ask live questions by pre-registering here. Upon registration, an individual access code and dial-in details will be automatically sent via email.
Please log-in or dial-in at least 10 minutes prior to the start time to ensure a fast connection to the call.
A replay of the webcast will be available through the OCI Global corporate website at www.oci-global.com
[1] Continuing Operations net debt of USD 2,194 million as of 30 June 2024 has been restated for the deconsolidation of OCI’s Methanol business
[2] Production of lower carbon ammonia is conditional on supply of carbon abated hydrogen and ExxonMobil’s CCS facility becoming operational
