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Portfolio/Fatima Fertilizer Company Limited

Up to USD 20.9 million guarantee of a 7 year amortising term loan denominated in USD

Fatima Fertilizer Company Limited
Tools
Pakistan

Overview

DATE OF TRANSACTION

DECEMBER 2014

COUNTRY

Pakistan

FINANCING PARTNERS

STANDARD CHARTERED BANK, ALLIED BANK, UNITED BANK, SONERI BANK AND MEEZAN BANK.

GUARANTCO GUARANTEE

USD 20.9 MILLION

Sector

Agri Infra

TOTAL TRANSACTION AMOUNT

PKR 667 MILLION SYNDICATED TERM LOAN FACILITY (USD 57.1 MILLION)

GuarantCo Benefits

Fatima is the largest local manufacturer of Calcium Ammonium Nitrate (CAN) and Nitro Phosphate (NP) with circa 80% market share in 2013. The demand for these products is growing given increasing awareness of their advantages over other fertilizers, and also the fact that they are cheaper than the mainstream fertilizers and thus more affordable to the smallholder farmers that form more than 80% of the agricultural sector in Pakistan.

Fatima reached maximum production capacity in 2013 and cannot satisfy local demand for its products with a growing waiting list of customers. The project will remove certain identified bottlenecks in the production process and involves the addition of a waste gas boiler to improve energy efficiency.

Tenors greater than 5 years are rare in the local banking market in Pakistan in either local or hard currencies. Consequently, Fatima approached SCB to help extend the average life of the financing that it was seeking to raise for its de-bottlenecking project. To achieve this objective, SCB approached GuarantCo to help it provide a 7 year off-shore USD loan to Fatima which would help extend tenor. Like other lenders in Pakistan SCB is unable to lend beyond 5 years locally and through GuarantCo’s intervention SCB was able to provide the longer tenor required by Fatima.

Development Benefits

Agriculture is the backbone of Pakistan’s economy and makes up 24% of the country’s GDP and employs 45% of the population (as of 2012).

In order to maintain food security for its growing population, agricultural output must grow at least 5-6% annually for Pakistan to reduce its poverty level

Fertilizer is Pakistan’s most important input in agricultural production and the fertilizer industry in Pakistan plays a key role in engaging with smallholder farmers, who comprise more than 80% of the agriculture sector, to educate them in how to improve their crop yields through the effective use of fertilizers.

Fatima is playing a leading role in this education initiative through its Farmer Profitability Program

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