Incitec, Wesfarmers circle Burrup fertiliser plant
Wesfarmers and Incitec Pivot have made indicative offers to buy Pankaj Oswal’s Burrup Fertilisers empire in the Pilbara in a move orchestrated by aggrieved financier ANZ, which is trying to close out a $900 million exposure to the controversial Perth tycoon.
It is understood the offers from Wesfarmers’ CSBP fertiliser subsidiary and Incitec were subject to due diligence but were rejected by Mr Oswal, who owns 65 per cent of Burrup Fertilisers, and his warring partner, Yara (35 per cent).
At that stage ANZ had not appointed receivers to Burrup Fertilisers and was therefore unable to overrule the warring shareholders and accept the offer on their behalf.
But it is understood the talks, in Melbourne less than two weeks ago, were designed to impress on Mr Oswal and Yara that there was strong outside interest in the Pilbara business and ANZ would not have any difficulty selling it in the event of a receivership.
ANZ put receivers into Burrup Fertilisers and took control of Mr Oswal’s shareholding in parent Burrup Holdings on Friday in response to the escalating battle between Mr Oswal and Yara for control of the ammonia business.
In addition to $360 million owed by Burrup Fertilisers, ANZ’s exposure to other Oswal companies is thought to be almost $550 million.
ANZ’s move is threatening the Oswal family’s empire, which includes a shipping business, a $400 million caustic soda venture in the Middle East, a restaurant chain and a half-finished $70 million mansion in Peppermint Grove.
It was the bank’s concern about the impact Mr Oswal’s battle with Yara was having on his financial status that prompted it to appoint PPB Advisory as receivers on Friday. By then Mr Oswal had already cleared out his St Georges Terrace office and flown with his family to India to visit his daughter.
Mr Oswal remains Burrup Fertilisers’ managing director but has been stripped of executive powers by PPB’s appointment.
PPB’s appointment has also scuppered a brazen attempt by Yara to parachute one of its executives, Rao Narsimha, in as Burrup Fertilisers’ managing director in place of Mr Oswal. It is understood the move was blocked by ANZ’s appointment of PPB, which is working with Burrup Fertilisers’ incumbent management team.
PPB has a mandate to sell Burrup Fertilisers which, with annual capacity of 850,000t of liquid ammonia, is one of the world’s biggest producers. Burrup Fertilisers was also poised to develop a $750 million ammonium nitrate plant on the peninsula to service the Pilbara’s mining sector and compete head-on with Wesfarmers’ CSBP unit. Despite the knockback, Wesfarmers and Incitec are expected to submit bids once PPB’s sales process kicks off in the new year. ANZ said it “expects to make a full recovery”.
Simon Theobald, of receivers PPB, said yesterday the main priority was to “stabilise the business, control the cash flow and communicate with major stakeholders”.
PPB officers have briefed Burrup Fertilisers’ about 120 staff, including about 80 based in Karratha, while Premier Colin Barnett has also been informed.
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