18 January 2023

Indorama buys “Ferganaazot” for $140 million

According to gazeta.uz, Indorama Corporation is buying Ferganaazot, one of the largest producers of mineral fertilizers in Uzbekistan, for $140 million. The deal will be fully closed only after the issues of ensuring gas supplies and creating a free market for manufactured products are resolved.

The State Assets Management Agency of Uzbekistan announced the sale of the “Ferganaazot” enterprise, one of the largest producers of mineral fertilizers, the press service of the AUGA reported.

A deal on the sale of 99.02% of the state-owned stake was concluded with the Singaporean company Indorama Corporation Pte. Ltd.

10 applicants showed interest in the purchase of the object, who were checked according to the announced qualification criteria, including the absence in international sanctions lists. 4 applicants passed to the next stage of selection.

According to the agency, Indorama Corporation came up with the best offer — a buyout price of $140 million ($130 million and 107 billion soums). At the same time, the investor committed to invest $100 million to modernize the enterprise.

“Based on an analysis conducted with the involvement of Deloitte and the International Finance Corporation (IFC), it is believed that in the current conditions of uncertainty in the global economy, turbulence in commodity markets and high risks of a global recession, the price parameters of the transaction are reasonable and correspond to the interests of the economy of Uzbekistan“, – the message says.

The State Assets Management Agency expects that Indorama, as one of the largest producers of mineral fertilizers, is able to carry out a complete modernization of “Ferganaazot”, whose total depreciation of production facilities is currently more than 80%.

In addition, the investor undertook to maintain all existing social programs of the enterprise, maintain the number and salary level of employees, organize employee training, and develop a modern environmental control program. Notably, in March 2022, Indorama Corporation CEO Prakash Kejriwal opposed such commitments.

The parties signed a sale and purchase agreement on January 16 as part of a business forum in Singapore on the eve of the visit of President Shavkat Mirziyoyev to this country.

However, the deal will be fully closed only upon the results of resolving issues on “ensuring the supply of natural gas and creating a free market for its products with the regulation of the norm in the relevant regulatory legal acts,” the message says.

The head of the State Assets Management Agency, Akmalkhon Ortikov, also spoke about plans for the privatization of Ferganaazot, which was expected before the end of the year. The International Finance Corporation (IFC), a strategic partner of the agency in the privatization of this facility, asked how the investor’s investments would be guaranteed, given that the enterprise runs on natural gas.

“We must provide the investor with a guaranteed gas supply for at least 10 years… About 5,500 people work at Ferganaazot today. Tomorrow after the sale of the plant, if there are interruptions in gas supply and other unforeseen circumstances, the entrepreneur will be forced to reconsider jobs”,- he noted.

The head of the State Assets Management Agency believes that due to the uninterrupted supply of raw materials, it will be possible to save jobs, and the investor will invest in the development of the enterprise with confidence.

Indorama Corporation is an international industrial conglomerate with over 160 manufacturing sites in 38 countries. The company is one of the world’s leading manufacturers of fertilizers, polymers, industrial chemicals, fibers, textiles, agricultural and medical gloves, with over 45,000 employees.

The corporation has been actively investing in Uzbekistan since 2010, and is developing projects in the field of textiles, agriculture and fertilizer production, which employ more than 3,000 local employees. In particular, the company has owned Kokand Fertilizers and Chemicals since 2019, which was created on the basis of the Kokand superphosphate plant after privatization.

“Ferganaazot” was established in 1962. It is one of the largest producers of mineral nitrogen fertilizers, defoliants and cellulose acetates. The total production capacity is 2.8 million tons of fertilizers per year. Net profit has only been growing in recent years: in 2019 – 220 billion soums, in 2020 – 292.6 billion soums, in 2021 – 348.7 billion soums, for nine months of 2022 – 299.7 billion soums.