Fitch Ratings Affirms IMC Global's 'BB+' Sr Sec Rating

Business Wire, May 8, 2002

Business Editors

CHICAGO--(BUSINESS WIRE)--May 8, 2002

Fitch Ratings has affirmed IMC Global's bank debt rating and senior unsecured debt ratings. IMC Global's senior secured credit facility is rated 'BB ', IMC Global's senior unsecured notes with subsidiary guarantees are rated 'BB', and IMC Global's senior unsecured notes without subsidiary guarantees are rated 'B '. Concurrently, Fitch has affirmed the Phosphate Resource Partners senior notes rating of 'BB '. The Rating Outlook is Stable for both IMC Global and Phosphate Resource Partners.

IMC Global's liquidity position has been substantially improved as a result of the sale of the salt business and certain chemical assets for $640 million ($600 million in cash and $40 million in equity). The 2002 bond maturity of $300 million has been repaid and $180 million is in escrow to meet a 2003 bond maturity of $200 million. Looking forward, $450 million in debt matures in 2005, although the senior secured credit facility agreement matures early if the maturing 2005 debt is not refinanced by October of 2004. Based on the improving outlook for phosphate fertilizer margins and continued strength in potash fertilizer margins Fitch's Rating Outlook is Stable.

Phosphate fertilizer market conditions deteriorated in 2001 as China scaled back on diammonium phosphate fertilizer (DAP) imports. As a result of bottom of the cycle pricing for DAP and the sale of the EBITDA generating salt business in 2001, IMC Global's 2001 credit statistics weakened from already low levels. Financial covenants under the senior secured credit facility agreement were amended and relaxed in December of 2001. DAP prices have since improved as a result of stronger Chinese imports of DAP. IMC Global's credit protection measures and free cash flow should be significantly better in 2002 than they were in 2001. Improvement in financial ratios should allow the company to enjoy continued access to liquidity via the revolver. In May 2002 revolver availability was $168 million (based on $210 million revolver reduced by approximately $42 million in outstanding letters of credit).

Credit protection measures, particularly EBITDA-to-interest coverage and debt-to-EBITDA, are expected to improve through 2002 and 2003 as EBITDA increases with higher margins. Free cash flow for debt reduction should turn positive, although stronger EBITDA will to some extent be offset by higher capital expenditures in 2002 and 2003 and by investments in working capital required to support higher sales levels. As a result, debt levels will probably not be significantly reduced by 2003.

IMC Global is the largest global supplier of phosphate and potash fertilizers and benefits from mining and fertilizer production facilities that are among the lowest cost in the world. Potash ore deposits are concentrated globally, which has limited the number of producers and resulted in consistent profits and cash flow generation. IMC Global generated roughly $800 million in potash sales in 2001, or about 40% of total 2001 sales. The phosphate fertilizer industry is more volatile, although IMC Global enjoys a leading market position and a low-cost production position, which affords the company a degree of flexibility during market downturns. IMC Global is also a significant producer of potassium and phosphate feed ingredients. Phosphate fertilizer and feed ingredients, which make up the company's PhosFeed reporting segment, generated roughly $1.2 billion in 2001 sales, or 60% of total 2001 sales.

Please see Fitch's forthcoming credit analysis report on IMC Global.