Independent financial analysis has shown Industries Qatar’s proposed purchase of Qatar Petroleum’s 25% stake in the share capital of Qatar Fertilizer Company for a purchase consideration of $1bn will not only bring higher returns to the company but also build-up IQ’s presence in the fertilisers sector, said HE the Minister of the State for Energy Affairs, Saad bin Sherida al-Kaabi.
Qafco has a “proven track record of operational excellence and a strong market position”, he said in his opening remarks at IQ's virtual Extraordinary General Assembly yesterday.
Al-Kaabi, also IQ chairman and managing director, said, “As part of IQ’s management efforts to adhere to the principles of good governance, while upholding the company's interest in a way that enhances the shareholders’ value, an independent financial evaluator registered with the Qatar Financial Markets Authority was engaged to evaluate the proposal to acquire 25% stake in Qafco.”
Al-Kaabi said, “Moreover, the proposal to purchase this stake in Qafco is consistent with IQ’s strategy and continued efforts to build its presence and add value across the downstream sector using the free cash flows available in an efficient and effective manner that is aligned with our central strategy and core business.
“The transaction would make Industries Qatar the sole proprietor of Qafco’s share capital with a full control over Qatar Fertilizer Company, and therefore would provide Industries Qatar an opportunity to make strategic decisions. On the other hand, the company will also look for more opportunities to further enhance its position in the downstream sector.”
The minister also expressed his deep gratitude to His Highness the Amir, Sheikh Tamim bin Hamad al-Thani, for his “inspired leadership, unwavering efforts and continued support and guidance in promoting” Qatar’s oil and gas sector.
The EGM, which was held electronically, was to approve the purchase of the 25% stake in Qafco from QP for a purchase consideration of $1bn.
It was also meant to approve the proposed amendments to the company’s Articles of Association concerning the constitution of its Board of Directors.
IQ said the new composition of the board of directors shall come into effect from the upcoming term of the board that will start from the date of holding the general assembly meeting to approve the financial statements of the financial year ending December 31, 2020.
The EGM also delegated IQ’s board of directors to negotiate, approve, sign and take all actions necessary to finalise a long-term strategic agreement regulating the relationship between QP and IQ.
Mohamed Jaber al-Sulaiti, manager, Privatised Companies Affairs Department at QP, said the transaction was “in line with IQ’s strategy to enhance the overall value” for its shareholders and investors.
“As you know, IQ currently owns 75% stake in Qafco and Qatar Petroleum owns the remaining 25% stake in Qafco. The proposal is to purchase QP’s 25% stake in Qafco for $1bn according to specific terms. I would like to emphasise here that this purchase would be entirely financed from IQ’s own sources of funding available in form of cash and bank balances,” al-Sulaiti said.
The effective date of the transaction would be January 1, 2020, until expiry of the new Gas Sale and Purchase Agreement (GSPA), which is December 31, 2035. The 25% ownership in Qafco will return back to QP at the end of the term for a nil consideration.
As part of this transaction, with effect from August 1, 2020, Qafco has entered into a new GSPA with QP for a period until December 31, 2035, covering all the gas requirements for Qafco trains 1-6 and the facilitates of Qatar Melamine Company.
This bundled deal would not only provide efficient and effective use of excess cash available at the group level, but also provide us with 100% control over the world’s largest single-site urea producer, along with favourable terms of the new GSPA with QP.
Al-Sulaiti noted, “I would like to highlight that this new GSPA would provide us with enhanced operational resilience and more opportunities to focus on the operational excellence, safety and cost efficiency. As noted in the presentation, the new GSPA would also bring additional financial benefits to the Group driven via improved profitability margins.
“In addition, and as part of the same transaction, with effect from 1st July 2020, Qafco would acquire 40% stake in QMC from QP at the net book value of QMC as of June 30, 2020.
“The valuation of this transaction was performed by a QFMA registered evaluator based on the expectations of product prices obtained from two independent globally recognised price providers. Moreover, the technical assumptions related to the future estimates of OPEX and CAPEX were further reviewed by a technical consultant.”
Qafco has a “proven track record of operational excellence and a strong market position”, he said in his opening remarks at IQ's virtual Extraordinary General Assembly yesterday.
Al-Kaabi, also IQ chairman and managing director, said, “As part of IQ’s management efforts to adhere to the principles of good governance, while upholding the company's interest in a way that enhances the shareholders’ value, an independent financial evaluator registered with the Qatar Financial Markets Authority was engaged to evaluate the proposal to acquire 25% stake in Qafco.”
Al-Kaabi said, “Moreover, the proposal to purchase this stake in Qafco is consistent with IQ’s strategy and continued efforts to build its presence and add value across the downstream sector using the free cash flows available in an efficient and effective manner that is aligned with our central strategy and core business.
“The transaction would make Industries Qatar the sole proprietor of Qafco’s share capital with a full control over Qatar Fertilizer Company, and therefore would provide Industries Qatar an opportunity to make strategic decisions. On the other hand, the company will also look for more opportunities to further enhance its position in the downstream sector.”
The minister also expressed his deep gratitude to His Highness the Amir, Sheikh Tamim bin Hamad al-Thani, for his “inspired leadership, unwavering efforts and continued support and guidance in promoting” Qatar’s oil and gas sector.
The EGM, which was held electronically, was to approve the purchase of the 25% stake in Qafco from QP for a purchase consideration of $1bn.
It was also meant to approve the proposed amendments to the company’s Articles of Association concerning the constitution of its Board of Directors.
IQ said the new composition of the board of directors shall come into effect from the upcoming term of the board that will start from the date of holding the general assembly meeting to approve the financial statements of the financial year ending December 31, 2020.
The EGM also delegated IQ’s board of directors to negotiate, approve, sign and take all actions necessary to finalise a long-term strategic agreement regulating the relationship between QP and IQ.
Mohamed Jaber al-Sulaiti, manager, Privatised Companies Affairs Department at QP, said the transaction was “in line with IQ’s strategy to enhance the overall value” for its shareholders and investors.
“As you know, IQ currently owns 75% stake in Qafco and Qatar Petroleum owns the remaining 25% stake in Qafco. The proposal is to purchase QP’s 25% stake in Qafco for $1bn according to specific terms. I would like to emphasise here that this purchase would be entirely financed from IQ’s own sources of funding available in form of cash and bank balances,” al-Sulaiti said.
The effective date of the transaction would be January 1, 2020, until expiry of the new Gas Sale and Purchase Agreement (GSPA), which is December 31, 2035. The 25% ownership in Qafco will return back to QP at the end of the term for a nil consideration.
As part of this transaction, with effect from August 1, 2020, Qafco has entered into a new GSPA with QP for a period until December 31, 2035, covering all the gas requirements for Qafco trains 1-6 and the facilitates of Qatar Melamine Company.
This bundled deal would not only provide efficient and effective use of excess cash available at the group level, but also provide us with 100% control over the world’s largest single-site urea producer, along with favourable terms of the new GSPA with QP.
Al-Sulaiti noted, “I would like to highlight that this new GSPA would provide us with enhanced operational resilience and more opportunities to focus on the operational excellence, safety and cost efficiency. As noted in the presentation, the new GSPA would also bring additional financial benefits to the Group driven via improved profitability margins.
“In addition, and as part of the same transaction, with effect from 1st July 2020, Qafco would acquire 40% stake in QMC from QP at the net book value of QMC as of June 30, 2020.
“The valuation of this transaction was performed by a QFMA registered evaluator based on the expectations of product prices obtained from two independent globally recognised price providers. Moreover, the technical assumptions related to the future estimates of OPEX and CAPEX were further reviewed by a technical consultant.”