Unocal completes sale of agricultural products business to Agrium
El Segundo, Calif., Sept. 29, 2000 -- Unocal Corporation today completed the sale of its agricultural products business to Calgary-based Agrium Inc. (TSE and NYSE: AGU) for approximately US$321 million and possible future consideration. The sale is effective at 11:59 p.m. PDT on Sept. 30.
The sale included Unocal's Prodica LLC and Alaska Nitrogen Products LLC (ANP) subsidiaries.
Unocal received approximately US$246 million in cash ($250 million adjusted for working capital and other changes) plus US$50 million principal amount of Agrium 6% convertible securities and approximately 2.6 million shares of Agrium common stock. The securities are convertible into approximately 4.2 million additional Agrium common shares. Unocal could also receive participation payments over the next six years related to future ammonia and urea prices.
"The sale is the latest step in the ongoing transformation of Unocal into a significant upstream E&P company," said Roger C. Beach, Unocal chairman and chief executive officer. "As we divest our non-core businesses, we are able to focus on exploiting upstream opportunities, which historically has been the highest-return segment of the oil and gas industry."
Unocal expects to use the cash proceeds from the sale for general corporate purposes, which may include debt reduction or possible acquisitions. Unocal has the right to have the Agrium convertible securities and common shares registered for resale. The proceeds from any resales would be used in like fashion.
Beach added that the company has received or expects to receive bids for Unocal's carbon and graphite businesses. The company anticipates negotiating sales agreements on those businesses later this year.
Unocal's Alaska oil and gas business unit will continue to supply natural gas to ANP from certain Cook Inlet fields and other sources pursuant to a 1998 agreement between Unocal and ANP that expires in 2009.
About Unocal Corporation
Unocal is one of the world's leading independent natural gas and crude oil exploration and production companies. At year-end 1999, Unocal had worldwide natural gas reserves of 6.6 trillion cubic feet, representing two-thirds of the company's overall hydrocarbon reserves.
In the second quarter 2000, Unocal's net worldwide natural gas production averaged about 2 billion cubic feet per day. This included about 1 billion cubic feet per day in North America, where Unocal is one of the largest independent natural gas producers.
About Prodica and ANP
Prodica provides nitrogen and sulfur products to agricultural and industrial customers throughout the western United States and northern Mexico. ANP manufactures ammonia and urea at its Nikiski, Alaska, plants for agricultural and industrial customers in the Pacific Region.
Prodica and ANP have approximately 525 employees. Approximately 88 percent of the employees have been hired by Agrium. Another 40 employees will be part of the transition team and remain with Unocal for up to six months.
Agrium is a leading global producer and marketer of fertilizer and a major retail supplier of agricultural products and services in both North America and Argentina.
This news release contains certain forward-looking statements about Unocal's possible receipt of participation payments, use of cash for debt reduction or other purposes, possible future asset sales, natural gas reserves and gas deliveries and prices. These statements are not guarantees of future performance. The statements are based upon Unocal's current expectations and beliefs and are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those described in the forward looking statements. Actual results could differ materially as a result of various factors, including certain of those discussed in Unocal's 1999 Form 10-K report filed with the Securities and Exchange Commission. Copies of the company's SEC filings are available from the company by calling 800-252-2233. The reports are also available in the Investor Information section of the Unocal web site.
Updated: September 2000