CF Industries looking at financing options, shares jump

Wed Dec 4, 2013 4:12pm EST

Chairman, President and CEO Stephen Wilson of CF Industries Holdings Inc., speaks during the Reuters Food and Agriculture Summit in Chicago March 16, 2010. REUTERS/Jeff Haynes

Chairman, President and CEO Stephen Wilson of CF Industries Holdings Inc., speaks during the Reuters Food and Agriculture Summit in Chicago March 16, 2010.

Credit: Reuters/Jeff Haynes

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(Reuters) - U.S. fertilizer company CF Industries Holdings Inc (CF.N) said on Wednesday it hired two investment banks to evaluate funding options, including a master limited partnership, pushing shares up 10 percent.

The nitrogen producer first disclosed in a regulatory filing that it was examining a master limited partnership (MLP) and "MLP-like structures" as well as other financing options.

CF has asked the two banks to help the company understand how MLPs work and whether there are opportunities within CF to use such a structure, said CF Chief Financial Officer Dennis Kelleher at the Citi Basic Materials conference in New York.

"I stress these are studies and there has been no conclusion," Kelleher told investors, adding that the process will stretch into 2014.

The company did not disclose the names of the two investment banks.

A master limited partnership is a dividend-paying investment vehicle that enjoys special tax breaks and is often used by natural resources companies.

The look at funding options comes after hedge fund Third Point LLC disclosed a large stake in CF in July and pressed for a bigger dividend. Tony Will, senior vice-president of manufacturing and distribution at the Deerfield, Illinois-based company, will take the helm on January 1.

In October, CF raised its dividend and announced a deal to sell its phosphate business to Mosaic Co (MOS.N) for $1.2 billion.

"What is clear is that a lot of positive changes have happened at CF," said Scotiabank analyst Ben Isaacson in a note. "Whether it's the dividend hike (with potentially more down the road), a new CEO, the sale of non-core assets, the progression of a major share repurchase program, and now a potential MLP conversion, the stock has worked very well."

Shares climbed 10.1 percent to $235.83 by late afternoon trading, its biggest percentage jump since July 29, making it the best performer on the S&P 500.

(Reporting by Chuck Mikolajczak in New York and Rod Nickel in Winnipeg, Manitoba; Editing by Chizu Nomiyama and Diane Craft)

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