DBRS Comments on AWB Limited Shareholder Approval of Agrium Offer

DBRS notes today that AWB Limited (AWB) shareholders have approved resolutions to facilitate the Scheme of Arrangement in relation to the proposed acquisition by Agrium Inc. (Agrium or the Company) of AWB, pursuant to an implementation agreement announced on August 19, 2010. AWB shareholder approval was an important step in allowing Agrium to complete its proposed acquisition of Australian farm service provider, AWB, for approximately $1.2 billion. Agrium is now expected to make a formal application on November 17, 2010, to Australian courts to approve the Scheme of Arrangement. If approved, Agrium expects the transaction could be completed on December 3, 2010. Agrium has also indicated that it expects to use primarily cash on hand to fund the acquisition.

As indicated in our news release published on August 16, 2010, DBRS believes that the transaction would complement Agrium’s existing retail business and would enhance its business presence in the Australian and New Zealand markets, providing a positive addition to the Company’s business profile. Fertilizer markets continue to show improvement and DBRS’s expectation for 2011 for fertilizer producers and retailers is for a solid year based on strong agricultural commodity prices. DBRS also feels that the scale of the transaction is well within the Company’s financial capacity, with approximately $900 million in cash on hand at September 30, 2010. The Company’s financial metrics are within the range of those expected for its BBB Senior Debt rating and completion of the AWB transaction is not expected to materially change them. Nonetheless, the proposed transaction remains subject to court approval and we are maintaining the Company’s rating Under Review with Developing Implications until court approval of the deal is obtained. If court approval of the acquisition plan as currently conceived is obtained, DBRS can be expected to confirm the Company’s ratings.

Notes:
All figures are in U.S. dollars unless otherwise noted.

The applicable methodology is Rating Mining, which can be found on our website under Methodologies.