First Tranche of Incitec Pivot Sale Successfully Completed

10 May 2006

Orica Limited today announced that the sale of a 56.5% stake in listed company Incitec Pivot Limited (IPL), via an institutional placement underwritten by Macquarie Equity Capital Markets Limited, has been completed at a final price of $21.00.  This will result in gross total proceeds for the 56.5% stake in IPL being $692 million. 

The balance of Orica’s holding in IPL (13.5% of IPL’s issued ordinary shares) are intended to be sold to IPL under a selective share buy-back, also at a price of $21.00, giving rise to further proceeds of $165 million.  The selective share buy‑back is subject to approval by IPL shareholders.

As a result of the sale of its total stake in IPL, it is estimated that Orica will recognise an after tax gain of approximately $399 million as an individually significant item in its full year 2006 results.

Graeme Liebelt, Managing Director and CEO of Orica Limited, said that Orica had recently completed a strategic review of its holding of IPL and had concluded that it was in the best interests of Orica shareholders to exit IPL and concentrate on the business opportunities embodied in its remaining business platforms.  He said that while the sale of IPL would have a short term impact on Orica’s earnings, he is confident that the remaining core business platforms would deliver excellent organic profit growth and would also provide ample acquisitive growth potential.  He further commented that  “the Orica balance sheet is in great shape and has the capacity to enable us to grow our existing platforms in the future in a financially disciplined manner.”

A presentation setting out further details of the impact of the sale on Orica has been lodged with this announcement.