Pankaj Oswal media: Indian pair give ANZ a good serve

IF YOU Google the words ”process server”, you may find at the top an advertisement inviting you to ”Call Gotcha We ‘Get-em’ ”.

The traditional notion of the process server conjures up images of a private investigator waiting to pounce on an unsuspecting scallywag.

Once the scallywag leaves his house, the server springs out from behind a tree, confronts the scallywag with an invitation to court and says, “You’re served!”

It must have been with high indignation then that the venerable directors of ANZ Banking Group were personally served with subpoenas at the bank’s Gothic Queen Street headquarters and around the leafier suburbs of Melbourne the other day.

The subpoenas compel them to produce documents in a court case that is being brought by Indian millionaires Pankaj and Radhika Oswal.

The Oswals are the entrepreneurs behind the $3 billion Burrup fertiliser business in Western Australia, which went into receivership in December 2010 amid claims that Pankaj had made improper payments to himself.

Burrup was Pankaj’s creation, though he was not the sole shareholder. He owned 30 per cent, his wife Radhika 35 per cent and Norwegian ammonia group Yara International had 35 per cent too.

When ANZ pulled the pin, it unleashed one of the biggest and fastest fee-grabs in Australian history. Fourteen months later, and the lawyers, receivers and other cuff-linked bounty hunters had cleaned out a cool $56 million.

PPB and Freehills were paid almost $19 million and $13.8 million apiece. No fewer than nine law firms, a slather of consultants and the ubiquitous ”assurance” firms feasted hungrily on the steaming Burrup carcass.

A maelstrom of lawsuits has ensued and the bank has a spot of explaining to do. Not that it was keen to do much explaining when approached with a list of questions by Fairfax Media last week – or, for that matter, when the bank took its annual meeting to the Oswals’ old stomping ground, Perth, last December.

It was there that ANZ chairman John Morschel flatly refused to answer questions about the status of the Oswals’ debt to the bank and whether appropriate provisioning had been made.

The answers to these and a host of other questions may be being kept from the public, but they are surely being discussed with some vigour around the ANZ board table.

Morschel and chief executive Mike Smith may opt to settle. If not, expect some juicy revelations to materialise over the conduct of the receivership.

Why is it, for instance, that Flagstaff Partners, a boutique Melbourne advisory firm, was appointed to advise the receivers on the sale of one of the world’s largest ammonia production plants? Flagstaff managed to charge $6.8 million for its advice. How was Flagstaff appointed? Did the bank dispense with the usual ”beauty parade” of investment banks with ammonia industry experience?

Lawyers for the Oswals have been anxiously awaiting the decision of the Federal Court’s Justice Antony Siopis, who is yet to decide the question of whether an inquiry into the appointment by ANZ of receivers to Burrup should be ordered.

Meanwhile, the Oswals have continued to cry foul over the sale of their shares in Burrup. Pankaj Oswal reckons that the share sale was bungled by Flagstaff Partners. He maintains they were forced to sell to Burrup’s gas supplier, Apache, on the cheap because of the negligent disclosure of the gas supply agreement – this low-priced gas contract was Burrup’s best asset – during the sale process.

He claims ANZ and its advisers were exposed to a huge claim from Apache and effectively bought out this risk through the sale of the Oswals’ shares for a song.

These claims will be tested in Pankaj and Radhika’s separate actions for damages in the Supreme Court of Victoria.

It is believed that ANZ’s lawyers also acting for Flagstaff produced just three documents from Flagstaff’s files – one being a curriculum vitae.

ANZ got its money back quickly. Nonetheless, the bank has kept $20 million from the sale of the shares in Burrup over and above the debt it is owed. The bank declined to respond to the question of whether it is ethical to hold back $20 million and deploy that money to defend litigation brought against it by that very borrower.

Could ANZ and PPB have achieved a better price for Burrup? The Oswals’ shares were sold for just $580 million – a sum that equates to the principal owed to ANZ plus interest and costs.

In view of this $580 million price for the Oswals’ 65 per cent stake in January 2012, Burrup’s other shareholder Yara acquired an additional 5 per cent in September 2008 for $141 million.

You do the maths.

At the height of the global financial crisis, a global competitor was willing to buy shares which priced the ammonia plant at $2.8 billion.

Adding to the mystery – if that is the right word, Pankaj Oswal claims he received two approaches for his shares in December 2010 at prices that valued Burrup at $1.5 billion.

One was from Wesfarmers, he claims, the other from Incitec Pivot.

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CF Earnings Exceed Estimates Amid ‘Strong’ Market for Ammonia

CF Industries Holdings Inc., the largest U.S. maker of nitrogen fertilizer, reported fourth- quarter profit that beat analysts’ estimates amid a “strong” market for ammonia.

Net income climbed to $470.7 million, or $7.40 a share, from $438.9 million, or $6.66, a year earlier, the Deerfield, Illinois-based company said today in a statement. Profit excluding gas and foreign-exchange derivative gains was $7.27 a share, topping the $6.96 average of 19 estimates compiled by Bloomberg. Sales declined to $1.48 billion from $1.72 billion a year earlier, less than the $1.58 billion average of 13 estimates.

CF said it saw record ammonia shipments in 2012. Farmers are using more nitrogen-based fertilizers after corn futures reached a record $8.49 a bushel in August and soybeans rose to their highest ever a month later, putting more money in their pockets. Cool, dry weather in November in parts of the U.S. also was conducive to the application of fertilizers.

“Every indication is that weather conditions were decent this fall,” Chris Damas, a Barrie, Ontario-based investment analyst at BCMI Research, said in a telephone interview before the results were released.

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Ammonia news: KBR Wins License and Design Package for Bolivia Fertilizer Project – Article

Houston, Texas – February 14, 2013 – KBR (NYSE: KBR) today announced it was awarded a contract by Samsung Engineering Company, Ltd. to provide a technology license, basic engineering design package, and supply of proprietary equipment for a 1,200 MTPD ammonia fertilizer plant in Carrasco, Bolivia.

The fertilizer ammonia complex will be designed using KBR’s Purifier Technology. KBR will additionally supply proprietary operator training simulators and a steam dynamic simulation study to ensure a safe, fast, efficient startup of the ammonia plant and continued support to the operations. This project is part of the Bolivian government’s strategic initiatives for monetization of natural gas and demand for urea in the region, with production operations expected to begin in mid-2015.

“We look forward to working with Samsung Engineering on this project which contributes to both strategic initiatives and overall development of the country of Bolivia,” said John Derbyshire, President, KBR Technology. “This award represents an opportunity to further expand KBR’s footprint in the Latin American market.”

KBR is a global engineering, construction and services company supporting the energy, hydrocarbon, government services, minerals, civil infrastructure, power, industrial, and commercial markets. For more information, visit

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Pankaj Oswal – Petrochemical January price rise a sign of a seller’s market.

The recently released Platts Global Petrochemical Index (PGPI) has revealed that petrochemical prices in January rose 6% from their December 2012 levels and that the rise has been 12% across the year.

The key index for the $3 trillion annual industry is based on changes from seven widely used petrochemicals.

Petrochemicals have a near universal application and are key components in plastic, rubber and nylon and other items that inhabit a whole range of industries.

With is change far outstripping the rate of inflation it is a good sign that the industry is on the rise.

A more comprehensive article is visible here:

By Pankaj Oswal

Pankaj Oswal – Saudi Arabia reaffirmed as the world’s largest reserve base for petrochemicals

New research has found that Saudi Arabia remains atop the list of countries in terms of its known petrochemical reserves.  The Kingdom is also the leading producer in the industry.

The reserve is said to house approximately one-fifth of global oil reserves in what is a good sign for the country’s economy and as a destination for investment in the petrochemical sector.

Astoundingly, 31.4% of the value in Saudi Arabian Stock Exchange lives with companies in the petrochemicals space.  In 2012, the raw revenue of the 14 stock exchange listed companies was SR 310.5 billion; up 5.2% on 2011 figures.

The figures should not be surprising to anyone who has a solid understanding of the global market, but they come as a timely reminder of Saudi Arabia’s hegemony among more attention to emerging markets.

By Pankaj Oswal