DOHA: Industries Qatar (IQ) announced its board of directors in a meeting held on 23 August has approved the proposed purchase of Qatar Petroleum’s (QP) 25 per cent stake in Qatar Fertiliser Company (QAFCO) for $1 billion and to convene an Extraordinary General Assembly (EGA) meeting to obtain shareholders’ approval of the transaction.
The effective date of the transaction would be 1 January, 2020, until expiry of the new Gas Sale and Purchase Agreement (GSPA), for a proposed purchase consideration of $1bn. The date and timing of the EGA meeting would be announced in due course.
The purchase of QP’s stake in QAFCO is consistent with IQ’s strategy to build its presence and create value across the downstream sector. This transaction specifically enhances the shareholder value by transforming IQ into a 100 per cent owner of the world’s largest single-site urea producer and expanding its footprints in a well-established fertiliser business, with a proven track record of operational excellence and market positioning, along with resilient cash flow generation capabilities spurred by synergistic opportunities.
As part of the transaction, QAFCO has entered into a new GSPA with QP with effect from 1 August, 2020 until 31 December, 2035, covering the gas requirements of QAFCO trains 1-6 and Qatar Melamine Company (QMC). In addition, and as part of the same transaction, IQ’s board of directors also approved QAFCO’s acquisition of QP’s 40 per cent stake in QMC, effective 1 July, 2020.
Being the sole shareholder, IQ will now have full control of QAFCO, which would provide IQ the ability to appoint all members of QAFCO’s board of directors and make investing, financing and dividend decisions independently, where QAFCO’s board will ensure the strategic alignment and oversee further creation of value for QAFCO and its sole shareholder.