OCI Global Sells Its Methanol Business to Methanex
OCI Global (OCI), a leading global producer and distributor of hydrogen products on Monday has announced that it has reached an agreement for the sale of its equity interests in its Global Methanol Business (OCI Methanol) to Methanex Corporation for $2.05 billion on a cash-free and debt-free basis.
OCI Methanol is a leading methanol producer in the US and through OCI HyFuels, a leading producer and distributor of green methanol today. OCI Methanol’s total productive capacity comprises the assets, which are in highly strategic developed market locations across the US and Europe with access to stable and low-cost USGC natural gas enabling first quartile cost curve positions, and with extensive distribution and storage capabilities near major industrial demand centres and key bunkering hubs.
Under the proposed transaction, Methanex will acquire 100% of the equity interests in OCI Methanol, comprising 100% of OCI’s US and European methanol assets respectively. OCI Methanol is indirectly owned 85% by OCI and 15% by its partners Alpha Dhabi Holding PJSC and ADQ.
The transaction consideration will be paid through a combination of approximately $1.15 billion of cash, taking into account net indebtedness, subject to customary closing adjustments, and the issuance of 9.9 million of common shares of Methanex.
Based on a price of $45 per share, Methanex share consideration of 9.9 million is valued at $450 million, resulting in OCI ownership in enlarged Methanex of approximately 13%. Financing is not a condition precedent for the transaction.
Proceeds from the transaction will be considered alongside expected proceeds from OCI’s previously announced divestitures in IFCo, Fertiglobe and OCI Clean Ammonia (the Divestitures).
Cumulatively, the Divestitures are expected to crystallize approximately $11.6 billion of gross proceeds for OCI and will afford the company considerable flexibility to unlock value for all its stakeholders.
Proceeds will be prioritised to significantly reduce OCI holding company gross debt and to return capital to shareholders. Future guidance on OCI’s capital allocation framework will be provided in due course of time.
Awaiting Court Verdict
The sale of OCI Methanol’s indirect 50% stake in the Natgasoline LLC joint venture as part of the transaction is subject to the resolution of a lawsuit filed in the Delaware Court of Chancery by Proman (CEL), which indirectly owns the remaining 50% stake in Natgasoline.
Some 40% of the gross transaction consideration and 23% of the net transaction consideration, taking into account net indebtedness or 23% of the implied equity value, is attributable to Natgasoline. OCI believes that Proman’s claims are without merit.
The transaction is expected to close in the first half of 2025 subject to the satisfaction of certain anti- trust regulatory approvals, customary closing conditions, and receipt of OCI shareholder approval, OCI Global said.
OCI’s Board of Directors has approved the transaction and has recommended that its shareholders approve the transaction. An agreement to vote for the transaction has been signed by the largest shareholder of OCI with an interest of approximately 39% in the company.
As part of the above transaction, Alpha Dhabi Holding will exit its 11% equity stake in OCI’s Global Methanol Business, known as OCI Clean Fuels Limited.
