CHS to purchase minority interest in CF Nitrogen; to Form Strategic Venture

In a news release Carl Casale, CHS president and chief executive officer, said the company decided the construction cost, water supply challenges, overall risk profile and time required for the Spiritwood project had changed significantly since it was first considered.

CF Industries Holdings (NYSE:CF) was downgraded by research analysts at Vetr from a “hold” rating to a “sell” rating in a report issued on Wednesday, MarketBeat reports.

CF Industries Holdings, Inc.is the manufacturer and provider of nitrogen fertilizer and other nitrogen products.

North Dakota Farmers Union President Mark Watne said he was disappointed the plant wouldn’t be built but happy about the deal between CHS and CF Nitrogen.

CF Nitrogen owns three of CF’s production facilities including Donaldson, Louisiana, Port Neal, Iowa, and Yazoo City, Mississippi.

CF plans to add its plant in Woodward, Oklahoma to the subsidiary before the transaction is concluded. CF Industries will continue managing its operations at all of the production facilities.

Minnesota-based CHS Inc. said Wednesday it will not move forward with a planned $3 billion fertilizer plant in southeastern North Dakota. For CF Industries, the transaction offers a reliable partner who will take estimated delivery of production throughout the year at lucrative returns. The deal includes a supply agreement under which CHS can buy up to 1.7 million tons of fertilizer annually. It’s the biggest single investment ever by CHS.

CHS serves 1,100 member cooperatives with 600,000 members across the Upper Midwest. The 1.7 million tons available under the supply agreement have an average gross margin that reflects the average gross margin across the entire CF system.

The transaction, which is subject to fulfillment of certain conditions is anticipated to close by Feb 1, 2016, or even prior to that based on mutual consent.

CHS, which is headquartered in Inver Grove Heights, will also be entitled to semiannual profit distributions from CF, which is basedin Deerfield, Ill.