Potash Says Shareholders Need More Details on BHP Plan

Shareholders of Potash Corp. of Saskatchewan Inc., the world’s biggest fertilizer company, need complete information about BHP Billiton Ltd.’s plans to acquire the company or to compete against it, a lawyer for Potash said.

Attorney Daniel Reidy, seeking to block the sale until BHP provides more complete disclosure of its intentions, told U.S. District Judge David Coar in Chicago today that his client’s shareholders weren’t being told about internal debate at the Australian company.

“BHP is deliberately overstating its commitment” to building a competing Saskatchewan potash mine that could be the world’s biggest in an attempt to drive down the Potash share price,” Reidy said.

BHP Billiton, the world’s biggest mining company, has said it intends to acquire a controlling interest in the Canadian company for $40 billion.

Coar heard about six hours of evidence and testimony from the parties on Nov. 4 as Saskatoon-based Potash pressed for an injunction. BHP has said the case has no merit.

“There is absolutely no evidence that their price was affected by anything my client did,” BHP lawyer Thomas Moloney told the judge today. “They provided no empirical evidence of that.”

‘Net Benefit’

Canada’s government on Nov. 3 said it wouldn’t approve the takeover of Potash Corp. by Melbourne-based BHP. Industry Minister Tony Clement said the proposal doesn’t confer a “net benefit” on his country.

BHP has 30 days from the ruling date to lodge an appeal. Reidy, Moloney and Coar today acknowledged that any ruling he renders may be moot unless the Canadian government reverses its determination.

Potash is a water-soluble form of potassium. More than 93 percent of its world-wide production, predominantly in Russia, Belarus and Canada, is used to make fertilizer.

Lawyers for BHP last week told Coar that the company wants to resolve issues with the Canadian government so it can complete the transaction under which stock must be tendered at $130 a share by Nov. 18.

Moloney today told Coar he should throw out the suit, arguing that the issue should first be decided by Canada and then by Potash shareholders.

Competing Mine

Reidy told the judge that evidence obtained from BHP during pre-hearing disclosure proved that while the company was making bold public statements about plans for a mine at Jansen, Saskatchewan that could produce 8 million tons of potash annually, there was undisclosed internal dissent over financing for the project.

The Potash lawyer cited one memorandum from BHP Chief Executive Officer Marius Kloppers to project leader Andrew Mackenzie, warning that without adequate cost-control there would be no Jansen project.

“This is the simple, brutal truth,” Kloppers told Mackenzie.

“That’s what they should be telling people,” Reidy said to Coar.

Moloney disagreed, returning to Mackenzie’s Nov. 4 testimony that the memo was part of a discussion between a CEO and an executive who reports to him.

“It’s just an honest debate. It’s not a scheme,” Moloney said. Jansen is a real development project, he said. “No other witness with knowledge testified otherwise.”

The case is Potash Corp. of Saskatchewan Inc. v. BHP Billiton Ltd., 10cv6024, U.S. District Court, Northern District of Illinois (Chicago).

To contact the reporter on this story: Andrew M. Harris in Chicago at aharris16@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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