Mosaic planning to use free cash for growth opportunities after reaching investment-grade status

By Jennifer Lanning Drey

Portland, Ore., Feb. 12 - Mosaic Co. plans to use its free cash flow to improve operating efficiencies, pursue strategic growth opportunities and continue on its path toward investment-grade status, Corrine Ricard, vice president of business development at Mosaic, said Tuesday during the Goldman Sachs Twelfth Annual Agricultural Biotech Forum in New York.

After prepaying a total of $1 billion in long-term debt since May 2007, the company believes it is close to being upgraded to investment-grade status and therefore plans to begin devoting more cash to growth and expansion projects in 2008.

"Once [investment grade status] is attained, we will be free from some of the covenants that restrict operational and strategic flexibility, allowing us to pursue new investment and growth opportunities," Ricard explained during the presentation.

The company's capital spending is expected to grow to between $360 million and $400 million in fiscal 2008 versus $292 million in fiscal 2007. The increase is largely due to expected growth opportunities, including the company's plan to expand its potash division, which is one of Mosaic's highest strategic priorities, Ricard said.

"Whether expanding capacity in our potash business or funding other capital investments, our means to do so have improved dramatically over the past year as we've strengthened our balance sheet," she said.

Following her prepared remarks, Ricard told an analyst that the company also would place a higher emphasis on reaching investment-grade status than on returning cash to shareholders, calling investment-grade status a "critical first step."

Mosaic is currently benefiting from a strong market and expects to continue to see sustained growth and price increases, driven by demographic, economic and geographic fundamentals.

"Competing end uses and growing demand for food, feed, fiber and now fuel, translate into a critical need for crop nutrients that can optimize crop yields," Ricard said.

Mosaic is a Plymouth, Minn., producer and marketer of concentrated phosphate and potash crop nutrients.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.