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Yara, Apache take control of Oswals' Burrup Fertilisers news
01 February 2012

Pankaj OswalNorwegian chemicals giant Yara International and Apache Corp, the second-largest US independent oil and gas company, will become joint owners of Australia's Burrup Fertilisers, the ammonia company formerly controlled by the controversial Oswal family.

Oswal family's majority stake in Burrup Fertilisers, Australia's largest ammonia producer, has been split between existing stakeholder Yara and Houston-based Apache, which operates the Harriet joint venture that supplies the gas to the Burrup Fertilisers plant.

Apache paid $439 million to Australia and New Zealand Banking Group (ANZ) to acquire a 49 per cent stake in Burrup Holdings, while Yara paid $143 million to increase its ownership in Burrup Holdings by 16 per cent to 51 per cent.

The total deal size is $582 million (A$549 million).

The plant will be renamed Yara Pilbara following today's deal, and post closing, Yara will become operator of the plant.

Apache had, in December 2011, agreed to acquire a 65 per cent stake in Burrup, but Yara, the minority owner of Burrup, had the right to match the bid.

In December 2010, Burrup Fertilisers, majority owned by Pankaj Oswal of the Oswal Group Global, had been put under receivership by its creditor ANZ.

Oswal and his wife Radhika, who have recently migrated to Dubai, owned 65 per cent of privately-held Burrup through Burrup Holdings, while the remaining 35 per cent was held by Yara.

Burrup Group owes ANZ around A$800 million, of which A$360 million is owed by Burrup Fertiliser, and the remaining A$440 by the Oswal Group. This is ANZ's biggest single impaired asset.

It is alleged that Oswal misappropriated large sums of company funds for his personal interest and payouts made to a Singaporean firm for Oswal's Maruti Shipping Company without proper authority or disclosure.

Under the deal, ANZ will recoup the entire loan owed by Burrup Fertilisers, but will continue to press its claims against the Oswal family over the remaining outstanding.

Oswal, meanwhile, had blamed Yara of arm-twisting by refusing to support Barrup's plan to increase price for ammonia since it was also a buyer under a 20-year purchase contract at substantially low prices.
Oswal also accuses Yara of reneging on a deal to convert Burrup from a public to a private company as agreed to by both companies in 2008.

Oswal had also refused to agree to the ANZ-Apache deal on re-pricing the 25-year gas supply agreement signed with Apache,  Tap Oil and Kuwait's Kufpec in 2002, at a price close to $1 per gigajoule or about one-seventh of current market price.

Buying Barrup Fertilizer will be extremely profitable for Apache since it is also a gas supplier to Barrup, but the deal would hurt Yara financially if Apache hikes the supply price of gas.
Burrup Fertilisers is the largest ammonium producer in Australia, producing 759,000 tonnes of liquid ammonia per year and accounts for 6 per cent of total world output.

The company had plans to invest $700 million to build an ammonium nitrate plant called Burrup Nitrates alongside its existing plant. Yara said it would push ahead with the construction of the plant in which it would own 75.5 per cent and Apache 24.5 per cent.

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Yara, Apache take control of Oswals' Burrup Fertilisers