China Investment Corp Converts Bonds in Uralkali

The Chinese Investment Corporation (CIC), through its wholly-owned subsidiary Chengdong Investment Corporation, converted its bonds in Uralkali, one of the world’s largest potash producer, to a 12.5% equity stake.

The news comes in the form of a press release issued by Uralkali on September 24th, 2013. According to the statement, the massive institutional investor converted exchangeable bonds it had purchased in November of 2012 into ordinary shares in the potash producer. The Sovereign Wealth Fund Institute posted an article back in November 2012 detailing the CIC’s initial investment.

The bonds were issued by Wadge Holdings Limited and Fenguard Limited, special purpose vehicles owned by key shareholders in Uralkali.

Roughly 90% of potash is used as a soil fertilizer. It is estimated that China imports roughly 20% of its potash for use on its crops. In recent years, potash exports have slowed due to the economic recession, and stockpiles have remained heightened. Forecasts estimate potash prices at US$ 300 per tonne before the end of the year, a steep drop off from the US$ 900 per tonne, just before the financial crises.

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