Fitch Affirms Mosaic's IDR at 'BBB'; Outlook Stable

  Fitch Affirms Mosaic's IDR at 'BBB'; Outlook Stable

Business Wire

CHICAGO -- May 15, 2014

Fitch Ratings has affirmed The Mosaic Company's (Mosaic) Issuer Default Rating
(IDR) and senior unsecured debt ratings at 'BBB'. The Rating Outlook is
Stable. A full list of ratings is presented at the end of the release.

KEY RATING DRIVERS

Mosaic's ratings reflect the company's position as one of the world's largest
fertilizer producers with good cost control, advantaged geography, and long
mine lives. The ratings consider the company's generally conservative
financial management, strong liquidity, and robust cash flow from operations.

Mosaic recently purchased CF Industries, Inc.'s (CF) South Pasture phosphate
mine and beneficiation plant, Plant City phosphate manufacturing facility and
ammonia terminal and fertilizer warehouse in Tampa for $1.2 billion, and
funded CF's asset retirement obligation escrow for $200 million. In addition,
Mosaic and CF entered into ammonia supply agreements whereby CF will supply
Mosaic with ammonia. Fitch views the transaction as strategically beneficial
for Mosaic, since the company will be able to add contiguous operating acres
to its land holdings in Florida. The supply agreement benefits Mosaic as well,
since it will not spend capital to build out its own ammonia capacity.

The company reached an agreement to purchase ADM's Brazilian fertilizer
distribution business for $350 million. This acquisition will help Mosaic
execute its strategy to increase its sales presence in Brazil.

Mosaic has repurchased and is committed to repurchasing a significant number
of shares through various agreements with large shareholders. Mosaic has
placed a flexible ceiling on the amount that it is willing to spend on share
repurchases via a hard ceiling on the amount of leverage it is ready to
endure. The company is willing to operate with a leverage of 1.5x mid-cycle
EBITDA, extending to 2.0x if a compelling strategic investment arises. Above
1.5x Mosaic would redirect free cash flow (FCF) to debt repayment in order to
maintain financial metrics consistent with investment-grade ratings, a
discipline that is commensurate with a 'BBB' rating.

For the LTM period ended March 31, 2014, Mosaic earned EBITDA of $1.8 billion.
Mosaic's LTM earnings were lower than expected due to weak potash prices.
Total debt amounted to $3.1 billion with the nearest long-term maturity of $89
million coming due in 2018. Mosaic had not drawn on its $800 million term loan
facility at March 31, 2014. Fitch forecasts roughly $2 billion in EBITDA and
negative FCF of up to $500 million in 2014.

Mosaic had substantial liquidity at March 31, 2014. The company had $1.48
billion available of its $1.5 billion credit facility which matures in 2018.
Mosaic has yet to borrow under its $800 million in committed term loans. Cash
balances were substantial with $2.5 billion at March 31, 2014. Mosaic's credit
facility and term loans allow for maximum total debt-to-EBITDA of 3.5x and a
minimum interest coverage of 3.0x. Fitch believes Mosaic will continue to
maintain meaningful cushion with respect to those covenants.

RATING SENSITIVITIES

Positive: Future developments that may, individually or collectively, lead to
a positive rating action include:

--A rapid accumulation of cash from operations used to repay debt;

--A higher level of consistency in FCF generation.

Negative: Future developments that may, individually or collectively, lead to
a negative rating action include:

--Sustained negative FCF;

--An erosion of liquidity below the company's targeted $2.25 billion and/or
cash balances below $750 million;

--Total debt-to-EBITDA above 2.5x due to a very sharp and sustained reduction
in the sales prices or sales volumes of Mosaic's fertilizers, or a leveraging
transaction.

Fitch affirms Mosaic's ratings as follows:

The Mosaic Company (parent)

--IDR at 'BBB';

--Senior unsecured revolver at 'BBB';

--Senior unsecured term loan facility at 'BBB';

--Senior unsecured notes at 'BBB'.

MOS Holdings Inc.

--IDR at 'BBB'.

Mosaic Global Holdings

--IDR at 'BBB';

--Senior unsecured debentures at 'BBB'.

The Rating Outlook is Stable.

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (August 2013).

Applicable Criteria and Related Research:

Corporate Rating Methodology: Including Short-Term Ratings and Parent and
Subsidiary Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=715139

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=830302

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Contact:

Fitch Ratings
Primary Analyst
Christopher M. Collins, CFA, +1-312-368-3196
Director
Fitch Ratings, Inc.
70 West Madison Street
Chicago, IL 60602
or
Secondary Analyst
Sean T. Sexton, CFA, +1-312-368-3130
Managing Director
or
Committee Chairperson
Bob Curran, +1-212-908-0515
Managing Director
or
Media Relations
Brian Bertsch, New York, +1-212-908-0549
brian.bertsch@fitchratings.com
 
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