Sherritt deals off fertilizer interest

Sherritt Gordon Mines and Unocal Canada announce that they have entered into an agreement under which Unocal has acquired a 50% interest in Sherritt Fertilizer Co. Sherritt Fertilizer Co., a partnership of Sherritt and its subsidiary Thio-Pet Chemicals, owns and operates a world-scale ammonia plant and urea plant at Fort Saskatchewan, Alta. The plants, which produce nitrogen fertilizers mainly for western Canadian markets, were brought on stream by Sherritt in 1983 and acquired by the partnership in 1984, along with the related project financing.

Unocal acquired its interest in the partnership from Sherritt in exchange for rights to certain natural gas reserves and facilities in north-central Alberta. Sherritt has contracted with Unocal to develop the reserves and operate the gas production facilities. Plans call for the expenditure of $8 million in 1987 for this purpose and it is expected that sufficient gas will be produced to meet about one-half of the partnership plant requirement s for feedstock and fuel, which total 50 million cu ft per day.

This sale of Unocal of the 50% interest will be reflected on Sherritt’s balance sheet as an acquisition of gas reserves and a reduction in its investment in fertilizer facilities and related project financing. This will result in a significant improvement in Sherritt’s debt-to- capitalization ratio.

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