Phosphate Holdings Files To Sell $200 Million in Stock (PHOS)

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Phosphate Holdings, Inc. (OTC-PHOS) looked like it was going to be an initial public offering, but this OTC company has filed to sell up to $200 million in common stock in a secondary offering.  We normally wouldn’t cover this except that it is a larger OTC company and Goldman Sachs and Merrill Lynch are listed as the two underwriters.

The company is a major U.S. producer and marketer of diammoniumphosphate, or DAP, the most widely used phosphate fertilizer.Unfortunately it appears that the company may have missed that hugeopportunity in the agriculture plays last year and the first half ofthis year.

It plans to use substantially all of the net proceeds from this offering to fund the engineering, design and construction of a new sulfuric acid production plant, which will be built at its existing facility in Pascagoula, Mississippi.

In 2007, it sold 620,569 tons of DAP at an average price of $353.80 perton, up from the 579,772 tons sold in 2006 at an average price of$225.21 per ton. For the six months ended June 30, 2008, it sold266,343 tons of DAP at an average price of $871.06 per ton. For theyear ended December 31, 2007 and the six months ended June 30, 2008, itgenerated total net sales of $222.4 million and $238.5 million, EBITDAof $85.7 million and $71.9 million, and net income of $48.9 million and$42.0 million, respectively.

Jon C. Ogg
October 14, 2008