Primavera takes stake in Chinese fertilizer maker

According to the parties, the renminbi-denominated bonds have a tenure of five years and the conversion price is fixed at RMB1.84 per share, which represents a 13% premium over the company's 20-day average. China XLX Fertiliser will use the capital to develop its fourth urea plant and acquire coal resources, with the remainer going toward general working capital.

The investment is Primavera's first in the agricultural and fertilizer space. As part of the transaction, Primavera partner Lian Jie will join China XLX Fertiliser as a non-executive director.

"This funding exercise enables us to diversify our funding channels and secure additional financial resources for future expansion. Moreover, this investment enables the company to optimize the capital structure and lower the gearing ratio," Liu Xingxu, China XLX Fertiliser's chairman and CEO, said in a statement. "By introducing an internationally renowned private equity fund as our long-term strategic partner, we can further enhance our shareholder base and corporate governance."

The company claims to be one of the largest and most cost-efficient urea producers in China, specifically producing and vending urea, compound fertilizer and methanol. China XLX Fertiliser is planning to open its fourth plant in Henan Province in 2013, which will boost its annual urea production capacity to more than two million tons, up from 1.25 million tons currently.

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• Topics
• Greater China
• China
• Primavera
• resources