Hello, everyone, and welcome to the OCI Global Investor and Analyst Call. My name is Seb, and I'll be the operator for your call today. There will be a Q&A session on the call. You can ask a question by pressing star one on your telephone keypad, or you can also submit a written question on the webcast. I will now hand you over to Sarah Rajani, VP of Investor Relations and Communications. Please go ahead, Sarah.
Thank you. Good afternoon, and good morning to our audience in the Americas. Thank you for joining the OCI Global Investor and Analyst Call today. With me are Ahmed El-Hoshy, our CEO, and Hassan Badrawi, our CFO. On this call, we will provide an update on our strategic review and further insights into our recently announced agreements to divest our stakes in Fertiglobe and Iowa Fertilizer Company to ADNOC and Koch Industries, respectively. I would like to remind you that any forward-looking statements made on this call involve risks, and the actual results could differ materially from those statements. With that, let me hand over to Ahmed.
Thank you, Sarah, and thank you all for joining us today. We can move to slide four. I'd like to begin by providing the context of these transactions, which are the result of the multifaceted global strategic review initiated earlier this year in March, with the objectives of closing the discount to OCI's intrinsic value and unlocking value for shareholders. These transactions reinforce our value creation track record, and with the crystallization of $7.2 billion of tax-free gross cash proceeds across, for OCI, afford OCI significant firepower to return capital to shareholders and a simplified platform to explore further value-creative opportunities in the energy transition space, building on our early mover advantages, low carbon ammonia and green methanol space and our existing infrastructure.
Hassan will further comment on the impact of these transformative transactions and implications for our business shortly, but I'd first like to give an overview of the key terms and strategic rationale for each transaction, beginning with Fertiglobe. Moving on to the next slide, slide six. We've agreed to divest our entire equity holding of 50% in Fertiglobe to ADNOC for a total of tax-free cash consideration of $3.62 billion. Additionally, in 2024, OCI will receive, will receive its share of Fertiglobe's H2 2023 dividends for the second half of this year. Plus, OCI may also receive potential upside from an earn-out mechanism that allows OCI to participate in future nitrogen market upside based on performance in 2024 and 2025. Moreover, we have agreed with ADNOC on a roadmap to explore str:...
Global strategic collaboration on future joint investments in decarbonization and product distribution across North America and Europe with OCI's remaining business, demonstrating ADNOC's conviction in OCI's strategic growth plans and the continuation of our constructive collaboration and relationship with ADNOC. Going on to the next page, on slide seven. This is a transformative step for OCI and a natural evolution for Fertiglobe as a listed entity that was underappreciated within OCI's sum of the parts. It marks a pivotal junction in our relationship with ADNOC since we came together in 2019 and formed Fertiglobe, and also with the IPO that occurred in late 2021. We're confident that within ADNOC, Fertiglobe has found an optimal long-term home, with Fertiglobe's lower carbon ammonia projects and growth opportunities, a strong fit with ADNOC's ambitious chemical strategy and its plans to establish a global growth platform for ammonia.
Moving on to IFCO, slide nine. Koch Industries has agreed to acquire 100% of the facility for a total consideration of $3.6 billion on a tax-free, cash, and debt-free basis. Net proceeds after debt and closing adjustments, as well as transaction costs, are estimated to be in the $2.5 billion-$2.6 billion range. Go to the next slide. We began building IFCO in 2012, and at the time, it was the first greenfield nitrogen fertilizer plant to be built in over 25 years. It revitalized the nitrogen fertilizer industry in the U.S. Midwest, particularly since we focused on developing the surrounding region's distribution logistics infrastructure to support the Midwest agricultural industry. As IFCO reached maturity with steady operating rates, we concluded it would be better served by a nitrogen fertilizer-focused company that can steer IFCO...
OCI's through its next phase of growth, and we launched a competitive process to unlock the intrinsic value of an underappreciated asset within OCI's overall valuation. With that, I'd like to turn it over to Hassan to take the rest of the slides.
Thank you, Ahmed. Hello, everyone. Turning to slide 12. With $7.2 billion of tax-free gross cash proceeds, these transactions unlock the equivalent of approximately EUR 27 per share for OCI. Notwithstanding the, of course, the continuing business that we have. As Ahmed mentioned, we will additionally receive our share of dividends from Fertiglobe in the coming months in the ordinary course, and we continue to benefit from upside the nitrogen market performance over the next two years. We will also continue to receive cash flows from IFCO until the transaction closes, which we expect to be in around mid-2024. Moving to slide 13. The results.
This transaction, this transaction results in a robust and well-capitalized remaining business that is well positioned to deliver tax-efficient capital returns to shareholders, and to invest in value accretive opportunities in the energy transition space, including low carbon ammonia and our methanol platform in Texas, our AdBlue DEF capacity in Europe, and leveraging our ammonia import capacity at the Port of Rotterdam, in addition to the existing fertilizer-premium fertilizer products in Europe. Our business for, our continued business in, in OCI, we believe will, generally have a $600 million-$700 million of mid-cycle EBITDA, just to help, our audience understand, how the company, how the company will be resized for these transactions. As always, we will continue to manage a well-capitalized and disciplined balance sheet, in the wake of these transactions.
Let me conclude by extending both mine and Ahmed's thanks to the entire OCI and Fertiglobe teams for their contributions over the years. With that, we will open the line for questions.
Thank you. If you'd like to ask a question, please press star one on your telephone keypad, or you can submit a question via the webcast. The first question comes from Andrew Keches from Barclays. Please go ahead.
Yeah, thanks, and congrats on the transactions. I just want to clarify. So you mentioned about $1 billion of debt and other adjustments related to the IFCO transaction. So I assume that means you're either going to pay down those IFCO muni bonds, or they're going to travel with the assets, and they'll be off your books. But you also mentioned, I think the quote is, "substantial reduction of HoldCo net debt." Do you expect to have to retire the HoldCo notes? I think the question we've gotten from investors is that you appear to be selling substantially all or a vast majority of your assets. In the case of at least one series of the notes, they're actually guaranteed by the IFCO box.
I'm just curious how you're thinking about those HoldCo notes, and do they remain outstanding? What does the right capital structure look like longer term for this business?
Yeah, I'm happy to answer that, and Ahmed can add any additional comments. We haven't yet discussed or we haven't yet disclosed our detailed use of proceeds in the wake of these transactions. As we mentioned earlier, it will be later in 2024 that these deals close, and we have the ability then to allocate capital. But what we can share at this juncture is that naturally there will be, we are heading towards a very well-capitalized balance sheet, and there will be reduction, and that involves a reduction in debt, in addition to a meaningful return of capital to shareholders through what we believe are tax-efficient avenues that we have available to us.
We will provide more color in due course as to the exact capital structure of the company, but certainly, you know, approaching the future with an IG profile, well-capitalized balance sheet that is fit for purpose, is something that we will be looking at in our consideration.
Okay. That's, that's helpful. And then, if I may, just one more. The $600 million-$700 million of mid-cycle EBITDA, can you, can you tell us what that, that run-rate EBITDA, where that stands today relative to that $600 million-$700 million?
Well, I mean, one way of looking at it, which is helpful, is that if you look at a year like 2021, for example, which was not the 2022 stellar prices that we experienced or maybe previous years where we were still-
Right
... going through some troubleshooting of assets, that year alone, had, adjusted for the various EUAs, that we had as part of the results, was, and assuming a proportionate adjustment of HoldCo costs for the resizing of the business, that year, our RemainC o would be just under $500 million of EBITDA. And that was, and that was not a... And that year was, I would say, below mid-cycle in terms of pricing, and excludes the future, EBITDA and cash flow streams of Texas Blue that yet to come online in 2025. I think that's a, just a good, a good indication, or barometer of, of what is in the realm of the possible.
Yeah, I think Hassan explained that well. This is Ahmed here. So, 2021 kind of has the, a little bit of the softness coming off of the, the COVID-led trough in 2020, and then, you know, some higher pricing in the later part of the year. So, you know, just under $500 million, excluding the clean ammonia project, is a good way to think about it. And just to your earlier question, you know, this is not considered a sale of substantially all the assets from a, from a debt perspective, but we may, you know, repay a portion of the debt.
... Thanks very much.
Our next question comes from Craig Shepherd, from Apollo Global Management. Please go ahead.
Thanks for the call. So, question on the muni debt. Is that traveling with IFCO? Is that the right way to assume that? And then how much of a special dividend are y'all gonna pay out of this 27 EUR per share? 'Cause it... I mean, it's substantially more than the $2.5 billion or $2.6 billion of RemainCo debt, once you deconsolidate Fertiglobe. So I'm just trying to gauge how big that—how much cash do you expect to keep on balance sheet versus kind of payout, given there's gonna be a net, you know, nearly $5 billion, you know, or $4.5 billion in excess, just in excess of what I guess RemainCo's debt is. And then assuming the muni debt travels, it's even bigger than that. Thanks.
Yeah. So I mean, with regards to the muni debt, that's, you know, attached to the asset of Iowa Fertilizer. And so from our perspective, from the OCI, and the OCI Global perspective, you know, that's why we're saying that the net proceeds would be in that $2.5 billion-$2.6 billion range. So that would go out of the consolidated HoldCo debt. I think that $2.6 billion, I assume you're assuming some $850 million for Iowa. So that would, you know, go down by that amount automatically with this transaction. And I won't comment on the intentions with regards to the buyer around the muni debt itself, but, you know, they could pay it back.
It could be, it could be removed, but also it had the ability to travel as well, if it had an investment-grade guarantee, right? So that's the decision of the buyer. With regards to what we will do as a distribution, you know, obviously, we're fresh off the transactions here, announced on Friday and then again this morning. As Hassan said, we anticipate a return of capital to...
a large return of capital to shareholders, but also the, you know, the amount of the gross proceeds of $7.2 billion and net a bit over $6.2 billion, is one that I think allows for, the return of capital to shareholders and some HoldCo debt pay down, as well as having some firepower for, you know, potential continued growth and, if it makes sense, investments.
Thank you.
The next question is from Sashank Lanka, from Bank of America. Please go ahead.
Yes, thank you for the presentation. I have three questions, if I may. The first one is, you know, on, on slide two, as when you talk about these net, net proceeds of $6.1 billion-$6.2 billion, are you taking into account tax here as well? That's the first question, both for the IFCO and the Fertiglobe transaction. The second one is, just clarifying on the $600 million-$700 million mid-cycle EBITDA. I guess it's a like-for-like comparison versus 2021, which means, the blue ammonia contribution is not included, right, in that? That's the second question. And the third question is, can you talk about this earn out mechanism, for, for the Fertiglobe stake? How is that gonna work? Thank you.
So to your first question, it is tax-free. To your second question, the $600-700 million does include an estimate for clean ammonia on a run-rate basis once it's up. So, you know what Hassan was saying and what I was adding on to is just under $500 million, was for the RemainCo business, excluding clean ammonia in 2021. So if you include clean ammonia, that's what gets you to that $600-700 million number, right? And, you know, it doesn't really account for much of anything in terms of a blue premium, which could, potentially push you higher.
Your third question with regards to the earn-out, this is one where, depending on how we perform in 2024 and 2025, you know, that could be additional proceeds towards OCI from ADNOC, but it depends on business performance, and we are not able to share more on that further at this stage.
Okay. Thank you.
Our next question is from [Lawrence Ferknal] from Credit Suisse. Please go ahead.
Hi, thanks for taking my question. It's just like follow-up questions, because most of my questions have been addressed. But, how much of U.S. Nitrogen today was IFCO? So that's my first question.
Basically, all of U.S. Nitrogen was IFCO.
Okay.
US Nitrogen-
Um-
... and N-7, which is a distribution platform. And with regards to, you know, our existing ammonia business in Texas, that is part of our methanol group earnings. That's 350,000 tons of ammonia that we've produced since, you know, that's the run rate, and we've had production since 2011 at that plant. And we're adding the 1.1 million ton blue ammonia, plant in 2025.
Okay, thank you. If someone mentioned that, IFCO was guarantor of your, I think the $600 million notes, the HoldCo level. So you said you're gonna address that once the transaction gets the regulatory approval, correct? I was wondering if you're going to amend... So my question was about the $600 million notes at the HoldCo level that are guaranteed by IFCO. And I was wondering how you want to address that. Are you going to simply repay the notes, or are you going to amend the terms in the documentation?
I understand that you're probably going to clarify that when you get regulatory approval, but in the meantime, it would be helpful to get some clarifications.
Yeah, I mean, effectively, the guarantee falls away with the disposal, but, you know, as such, we are committed to having a prudent financial policy and a capital structure that is going to be reflective of the new status of the company. As you can imagine, it's not really a cause for concern now that we're talking about $7.2 billion of cash proceeds coming in. So we have significant flexibility to accommodate all goals.
For potential repayments, you mean? Hello?
Sorry, could you repeat that last part of the question? Did not hear you.
No, I mean, you, you mean that with $7.2 billion of proceeds, you have the flexibility to potentially repay these, these bonds, right?
Yeah, absolutely. We have that, we have that ability to do it, and we are focused on our pro forma capital structure, and we'll share more on that, over the coming months during the regulatory approval process.
Okay. Thank you. Thank you very much.
Thanks.
Our next question comes from Dalal Darwich, from Goldman Sachs. Please go ahead.
Yes. Hi, thank you for the presentation. I'm just gonna ask a few questions on behalf of Faisal Alajmi, who has joined us through the webcast. So maybe just a couple of questions from our end. First, on the free cash flow of the company going forward. So how does it look like post the asset sales? If you can share with us what the maintenance CapEx profile would look like. That's the first one. The second one is also on the tax profile, so very similar question, but on the tax profile of the company also, how do we think about this going forward?
The last one, when it comes to the corporate and the eliminations, on the EBITDA front, how much of it comes from IFCO and Fertiglobe, and how much will you remain post the asset sale?
Sorry Dalal , could you repeat the last question? How much of what comes from IFCO, and you're saying attributable cash flow or attributable EBITDA? I wasn't sure I understood the last part of your question.
The corporate and eliminations, part that's related to the EBITDA. The negative amount, the corporate and other-
Right.
Eliminations.
Yeah.
Yeah.
Corporate cost elimination. Yeah. Go ahead, Hassan.
Yeah.
No, I think, I mean, we'll, we'll—we will provide in due course, a little bit more visibility on the, on the makeup of the, or the composition of the run rate mid-cycle. But I can tell you that excluding, Natgasoline, which is obviously a dividend-paying, subsidiary for OCI, we're talking about a free cash flow, conversion of circa 50%. So that's, that's just a good indication.
This is the
And of course, we will share-
Post the sale of the asset.
Yeah. Yeah, we will share in due course, a little bit more of the underlying drivers, going forward, but that's kind of the, the ZIP codes.
Okay.
With some assumptions that we made on HoldCo structure . Obviously, we're going to be engaging in, you know, reevaluating our cost structure going forward, to make it fit for purpose, following these transformational transactions. Obviously, some of the, you know, a good portion of the SG&A is naturally eliminated as part of the deconsolidation, but from the whole group cost perspective, there'll be some work to be done to adjust for the future.
Got it. Thank you.
Our next question is from Aron Ceccarelli from Berenberg. Please go ahead.
Hello, good afternoon. Thanks for taking my question. I have two. The first one is on nitrogen in Europe. You are now left with 2.9 million tons production in Europe. Maybe why this part of the business is now core to OCI? And other words, is this, is this strategic review now completed? The second question is around net debt. So if I look at your net debt on the first nine months of the year, was $2.3 billion. Considering the big payout in terms of dividend you have in Q4, what kind of move are you expecting in terms of net debt for the full year?
Yeah, I can take the first part of the question. So in terms of the OCI Nitrogen facility, which we have in Europe, that's today, right? A fertilizer facility mainly that has 1.2 million tons of CAN production. It has the capacity to do 700,000 tons of UAN. It is the second-largest melamine producer outside of China. And what we are adding next year is the ability to have, in Q1 of next year, AdBlue or diesel exhaust fluid for the first time, so on the industrial side, and then we're adding CAN plus S, so adding sulfur to kind of widen the product slate. In terms of, you know, when we think about the remaining business, we really have kind of two hubs. You have Texas, and you have the Netherlands.
Texas, you have the existing methanol and ammonia business, with low-cost gas, you know, a robust platform, a distribution platform to be able to sell locally, but also to export. We're adding on the blue ammonia project, and we can enter into the kind of the blue and the green space on both, ammonia and then, and the green space on the methanol side to go after not just, fertilizer, but also industrial chemicals and, fuel space. So the transportation fuel space, marine and road, as well as power sector, to decarbonize all these sectors in the hydrogen space.
When thinking about the Netherlands, we have the facility that I just talked about in the south of the Netherlands, OCI Nitrogen, and we have 30,000 tons of storage and throughput capacity in Rotterdam, and the only ammonia throughput capacity in Rotterdam. Where there's benefits is the ability to distribute ammonia into the, you know, the Dutch markets and Western European markets as a potential feedstock for fertilizer, and then to go into the chemicals and ultimately the fuels value chain and as a hydrogen carrier. So there, there's benefit to distribute it. And in terms of the strategic, you know, alignment there, we continue to being focused on value.
With regards to OCI Nitrogen, as you know, this last year was a trough year for OCI Nitrogen in terms of its performance over the last 15 years. It has not been close to run rate, and we see that over the next several quarters, we should have much more an improved financial performance. So as part of the strategic review, it is concluded without anything, without anything done on the OCI Nitrogen side, you know, given where we stand and where we see, opportunities for investments to widen the portfolio and slate of, production, as well as to get back to a run rate, earnings profile at that business.
On the second, on the second question, as I mean, we, we don't provide explicit guidance, forward guidance, on EBITDA cash flow or net debt. So, but as you can imagine, in the context of these transactions, you know, this is a, this is a transformational moment for the company, that puts us in an extremely solid footing going forward from a being well capitalized, and allows us to retain a meaningful amount of cash potentially on the balance sheet to tackle these smart growth opportunities going forward that Ahmed described. And we will be able to return a substantial amount of capital to shareholders. Not only that, but also in a very tax-efficient manner. Thank you very much.
Our next question is from Charles Bentley at Jefferies. Please go ahead.
Okay, thank you guys for taking the question, the opportunity to ask the question. Can I just ask, just a bit further on these, decarbonization opportunities you're talking around? I know it's in both releases. You talk about exploring opportunities with ADNOC. You've obviously got Texas Blue under construction. Should we be thinking about, something of that nature? And do you think usually you're looking at doing something of that size and scale and potentially more than one? Just any kind of thoughts around that? First question, one.
Sure. So with regards to the low carbon, you know, growth opportunities, obviously, the biggest one, our biggest investment globally is the 1.1 million ton Texas Blue project that we're executing with Linde and ExxonMobil. I believe in the last conference call, I walked through the fact that we have the ability to do a second line there. But the matter at hand right now is to execute on the first line, and we are talking to strategics, both Asian off-takers and strategics more generally, around the ability to potentially have a home for some of that 1.1 million tons of ammonia and, you know, minority equity position as part of that. What we think is that second line has a big advantage over any other potential new project, despite us being the only project under construction in the United States.
Once the first line has some of that ammonia spoken for, that second line has the benefit of a lot of the utilities, the offsites being already in place, so that we're talking about mainly inside battery limits type investments, save for a few utility type investments. So you're talking about $1 per ton that's very attractive, where we're doubling size. We don't have to really do much in terms of engineering around the process facilities for that plant. So that's one of the avenues where we can use it to export low-carbon hydrogen in the form of blue ammonia globally. So that's kind of one main area.
Obviously, you know that we've also announced that we're doubling the capacity between methanol a few months ago, and that we're gonna be with New Fortress Energy, taking green hydrogen as an off-taker to make green ammonia with our existing ammonia plant and potentially our existing methanol plant, and also we have the capability of doing it in the Texas Blue project as well.
... Okay, but I'm just trying to get a sense of scale of cash you might retain for these types of projects. I mean, should we be thinking that you'd add another line for that, and there could potentially be the possibility of undertaking another project, or do you think that would be too ambitious an expectation?
I think we'll probably be sharing more on where we stand over the course of this regulatory approval process with regards to the process around the existing first line. But we will be looking to potentially have some offtakes in place over the next few quarters. Obviously, we'll use our European distribution to sell some of that product. We have the United States as well to sell some of that product, but we'll probably have that more progressed before an announcement is done on the second line financial close.
Great, thanks. And then just one final question, which is, if I look at the premium on the, I mean, it's obviously the proceeds are very, very significant, but I guess the premium on the first close state seems relatively small. Can I just ask you around, your considerations on, on accepting that value, and why you think that? I mean, I guess, given the, the shares of trading meaningfully above that level in the last twelve months.
Sure. I mean, the share value of AED 3 and 20 fils was an 8% premium to the undisturbed price of Fertiglobe and a 25% premium to the IPO. But it does have this earn-out mechanism over and above the valuation that we received at close. So, you know, basically from our perspective, you know, one big driver with the strategic review was the fact that in no way, shape, or form was that valuation with or without a premium, reflected in the HoldCo valuation of OCI. And in this way, we've crystallized that valuation and been able to kind of return that to shareholders at the OCI global level and have the ability for upside via the earn-out.
Great. Thanks.
Our next question is from Rikin Patel, from BNP Paribas. Please go ahead.
Hi, thanks for taking my questions. I just had two left. I suppose now that the strategic review is now largely done, the remaining asset portfolio is mainly methanol. And of course, you tried to sell this business back in 2019. So I'm just curious, will you consider to actively assess strategic options for the methanol business? And secondly, just going back to the conversation around mid-cycle EBITDA, the main co, the $500 million, so excluding the ammonia project in the US. Can you just give a split on that between the European fertilizer business and methanol? Thanks a lot.
Sure. So, I mean, it's a good question. We had the strategic review for the methanol business back in 2019, following, you know, reports and, I think we did a press release at the time on an inbound bid. I think it was in late 2019. We did make a 15% sale in late 2021 to Alpha Dhabi and ADQ, where... So we continue to own 85% of the business.
In terms of the potential we've seen since that date and what's happened since, you know, the discussions back in 2019 and 2021, it's just been an acceleration of methanol future as a shipping fuel, where we've seen over 200 ships ordered and potentially, you know, north of 6-7 million tons worth of marine fuel demand by 2028. And we currently are the largest green methanol producer and are looking to expand production in that space. So it's an area where we feel more and more excited about it, that as a fuel. And when it comes to ammonia, yes, today we're at 350,000 ton capacity with that plant in Texas, but we also have the 1.1 million tons coming online by 2025.
So when you think about on a run rate basis, we will have, you know, you know, about almost a million and a half tons of ammonia capacity, a large portion of that blue. And it makes us the only producer of low-carbon methanol ammonia that have that opportunity to decarbonize many of these hydrogen-related industries, and kind of decarbonize, take away, or sorry, substitute in for fossil fuels, as we develop a price for carbon, with Carbon Border Adjustment Mechanism coming in place in 2026 in Europe, with Fuel EU Maritime coming in place in 2025 for the shipping space and with the IMO doing the same.
So we think it's not just a methanol business, it's a methanol and a low-carbon ammonia business, that has that ability to go into that space, and where we will probably start seeing, you know, sales that, that maybe have a bit less volatility with regards particularly to the ammonia side, where we can do, you know, a cost-plus based ammonia for low-carbon purposes. So a bit more greater stability, for that part of the business over time as it evolves. With regards to-
And then-
You also said, I'll mention, and then, you know, I want to kind of hand it over to Hassan as well. There'll still be OCI Nitrogen facility, which is a large fertilizer and industrial player in Western Europe and the strategic tanks we have in Rotterdam. So those are also part of the business and the Dutch methanol plant, BioMCN, that today has been shut down now for over two years, but has option value we see as a potential opportunity for a green future to make a green methanol over time, as part of our methanol business. Hassan?
... No, no, good point, aha. And then, I was just going to respond to the second part of the second question on the number that we referenced earlier, which was the 2021 example, that included the methanol and OCIAM business. I would say the split was about 70/30 between methanol and the European nitrogen business, in that example. And that, of course, excluded, as I had mentioned earlier, the future pro forma effect of Texas Blue.
Okay, thank you both.
The next question is from Mark Adeeb from CI Capital. Please go ahead.
Hello. Thank you for the call. I just have two questions, if I may. The first one regarding the time of the sale, given that commodity prices are currently below mid-cyclical condition, wouldn't that have been just, like, better for shareholders to maybe sell at a later date, if possible? Because I'm under the impression that, like, the deal value is below the IPO price. My second question, should we expect more asset sales coming forward? Thank you.
So, you know, I think it's a good point in terms of where we are, you know, over the last several quarters. But, you know, maybe starting with IFCO transaction, and we can get into the Fertiglobe one. The IFCO transaction was a highly competitive process that had multiple rounds. And, you know, if we weren't comfortable with the value that we achieved during that process over the course of the work that was done over the last several months, we would not have proceeded with the transaction. So we think that we were able to achieve a good value out of that sale process, despite, you know, some of the volatility that we've had in the underlying markets at that time.
With regards to the sale below the IPO price, I don't know if you're talking about Fertiglobe or OCI, but the IPO price was AED 2.55 dirhams, and we've since and we did this purchase last Friday, announced at AED 3.020 dirhams. So it's above the IPO price, despite a sizable amount of dividends also paid from October of 2021 when it was listed until today. So, like I said, in terms of valuation, when it comes to Fertiglobe, we, as OCI, are able to continue to participate in the upside in nitrogen pricing with the earn out for 2024 and 2025.
We do see the outlook continue to be strong on the nitrogen side and the ammonia side over the medium term given, and you've heard this in prior conference calls, but given we know where we stand in the ag market with low stocks, an incentive to apply fertilizer, apply fertilizer, nitrogen fertilizer in specific, and kind of a deficit when you think about new supply coming to the market, you know, trailing new demand over the next few years. That's setting aside the kind of clean ammonia future, which we see in the latter half of the decade.
Yeah. Sorry, I was gonna address the question from an OCI perspective, but so maybe we confirm first that was a reference to OCI and Fertiglobe.
No, I actually meant for OCI, so, like, in terms of the IPO price.
Yeah. Well, as you know, from an OCI perspective, it was not really an IPO, it was more of a migration of listing, from the previous listing, structure to the Netherlands, which involved predominantly a significant, swap at the time of, local shares and GDRs into the, into the Euronext listing. And I think when you have, when you look at OCI, you have to take into account the, the $2.1 billion of distributions that are taking place since we started paying dividends, in addition to the OCI construction spin-off, dividend, which was also, north of $600 million, I believe. So I think that's. You have to look into, take that into account as well.
All right, thank you. My second question regarding to the asset sale, should we expect more asset sales, like, going forward? Can you give us some guidance on this, please?
Well, the near term, this is the conclusion of our strategic review, but I do want to remind, you know, obviously remind you, Mark and others, that, you know, our approach has continued to focus on value creation, for stakeholders and shareholders. So, you know, to the extent that there is an opportunity, to find a better home for an asset where, we could achieve, a good valuation, that's something that I wouldn't rule out over the course of the next several years.
All right. Thank you.
No problem.
Our next question is from Shalin Kapadia, from JP Morgan. Please go ahead.
Hi, thank you for taking my question. I just have one, please. So, is there any cash tax on any of the transactions on book gains? And if there is, is that part of the net proceeds of $6.1 billion-$6.2 billion? Thank you.
No, there's no tax.
Okay, understood. Thank you.
The next question comes from Jonathan Brackman at BlueCrest Capital. Please go ahead.
... Hey, thanks, guys. I just have two quick questions, and it's more about the, your sort of, your thought process about the, you know, blue ammonia market moving forward. And so first one's a little easier. Can you just quickly kind of give a sort of the latest view or update on the process of the construction of the new facility in Texas? Is or what's the timing like there still the first part of 2025?
Sure. So, you know, we, we've basically gone well underway on the civil side. We've completed all the piling, we've put the steel structure up, and we're receiving major pieces of equipment, kind of as we speak over the next few months and starting to install them. So things are on track for the ammonia plant as well, for the ammonia plant, as well as the storage tanks. So we're still anticipating a startup in 2025 for that ammonia plant. I'll add that we're also connecting, you know, hydrogen and nitrogen connections, not only to Linde, but also to broader hydrogen-nitrogen pipeline networks to support the plant as well. So that's currently where we stand in terms of that project.
Got it. Super interesting. And then, you know, the next one a little bit more, sort of, you know, if we can kinda ask, like, you know, what you think moving forward, and I gather that you guys are kind of, you know, much more bullish on the sort of blue ammonia and that market moving forward. I guess, when you think about kind of like, you know, a normalized prices in that market, you know, over the next, like, two years, and given, you know, how much market share you'll be sort of gaining, kind of like, what would you expect, you know, that market to move towards from a pricing perspective?
I think it's a very interesting question. I think that to achieve the low carbon nature of blue ammonia for regulatory values, often you're gonna have to be looking at new build autothermal reformers rather than existing plants that just capture CO2 and put it in the ground. The beauty of our plant is that we have electric-driven compressors versus the typical steam-driven compressors or gas-driven compressors, which allows us to decarbonize via renewable electricity. Our focus is obviously on how we can create the most value out of that plant. I think the challenge sometimes is there are a lot of announcements in this space, and there have been quite a few blue ammonia supply-side announcements, but I mentioned earlier, we're the only one that has achieved financial close and is currently under construction.
I think that what's unique about the blue ammonia space, particularly in Texas and with the IRA, is that unlike potentially going very big on green ammonia right away, where there's big technology risk, and you know, there's an assumption that electrolyzers will get cheaper over time at scale, et cetera, et cetera. OCI has chosen to make its biggest investment in the blue ammonia space because we think being a first mover can actually be an advantage. We're, one, leveraging our existing methanol and ammonia presence and dock infrastructure and storage that exists in Beaumont today and building right next door. So there's that synergy from that perspective to make an easier project. But two, since the IRA was ratified in August of last year, we've seen basically a very large increase in capital cost that's just continuing to go up.
And in the case of our blue ammonia project, as well as even Linde's portion, which is the autothermal reformers and air separation units, this is all proven technology. So waiting is not gonna see really much of an improvement in technology. We're talking about state-of-the-art technology, where Linde can capture over 95% of the CO2, and we're using KBR ammonia technology, which is the most efficient ammonia technology in the world. So, you know, we don't have that issue of going into the market too early from a technology perspective, and all we've seen is an increase in the construction cost, the equipment cost, the busyness within the U.S. Gulf Coast and the broader North American markets, and we only see that increasing.
And so from that perspective, we think that a lot of these projects that have been announced will not see the light of day. Puts us in a better position as we talk about offtakes for this plant. But I won't go as far as to give you explicit guidance on what we think in terms of pricing for that market as we see it evolve.
What we do see are big supports around the Carbon Border Adjustment Mechanism, starting to price CO2, over time, starting in 2026, and the, the gas directive and at the EU, with Fuel EU Maritime, potentially the adoption of blue ammonia as a marine fuel could have, once fully implemented, $900+ a ton value for blue ammonia, if it gets ratified as a marine fuel, which we think is, which puts this plant in an excellent position.
Thank you very much.
We have no further questions on the audio call, so I'll hand over to Sarah for webcast questions.
Thank you. First question comes from, [Rutger Brutalis], who's asking, "Was this the last step of your multifaceted strategic review, or are there still talks ongoing, for unlocking further value in the short term?
Yeah, I think we answered that question, that this is a culmination of the strategic review, but we, you know, we're always looking to maximize shareholder value and stakeholder value, and you know, at some point, there could be a disposal or other type of M&A in the future, not in the short term.
Second question from David Loy: "What is the threshold to approve the Fertiglobe deal at the AGM, and can the OCI chair vote?
The threshold is a simple majority, and there are no exclusions from holding.
Third question from Yousef Husseini: "Do you see any risk of potential objection from the U.S. government for antitrust reasons on the IFCO divestment?
No, we do not. We see very little regulatory risk, and also the fact that it is a global commodity, with where IFCO is at, are all reasons why we feel very comfortable from a regulatory perspective, as does the buyer.
Further. Another question from Laura Cross: "Will OCI retain its share in the N-7 distribution network? And if so, does the sale of IFCO to Koch include any offtake agreement from the plant?
More details around, you know, N-7 and how that will look post transaction will be provided during the regulatory approval period.
I think the remaining questions have already been answered, and there are no further questions at this time.
Great. Great. Thank you all for joining this call, and appreciate all the good questions here, and looking forward to our discussion of Q4 results next year. Happy holidays, and have a happy New Year.
Thank you, everyone.
This concludes the conference call.