Read the ProjectN FAQ
Be sure to check out What’s This All About?
for answers to general questions and the Fertilizer Facts
section for data that helps understand the business case.
Q: What is FNA Fertilizer USA ULC?
A: FNA Fertilizer USA ULC is an unlimited liability company incorporated under the laws of the Province of British Columbia. Its sole purpose is to provide a tax efficient vehicle for U.S. farmers to gain an ownership interest in ProjectN. FNA Fertilizer USA ULC will use the funds raised from the sale of seed capital shares to invest in FNA Fertilizer Limited Partnership, a limited partnership formed under the laws of Ontario, that will hold direct interests in the entity that owns and operates the plant.
Q: What is FNA Fertilizer Limited Partnership?
A: FNA Fertilizer Limited Partnership (“FNA FLP”) has been formed to facilitate the seed capital raise to implement ProjectN. Currently, FNA FLP is in charge of setting the groundwork for ProjectN. At a later date, it will own interests in the entity that owns and operates the plant. Consequently, Canadian farmers (through their FNA FLP interests) and U.S. farmers (through their FNA Fertilizer USA ULC interests) will both be indirect part owners of the plant, capturing the significant profit margins they themselves generate through their use of nitrogen fertilizer.
Q: What is ProjectN?
A: We refer to FNA Fertilizer USA ULC, FNA Fertilizer LP, and together with a strategic partner(s) as ProjectN.
Q: What are Seed Capital Shares?
A: Seed Capital Shares are the initial type of equity interest in ProjectN. When you subscribe, you become a direct investor in FNA Fertilizer USA ULC, and thereby an indirect investor in FNA FLP, and, as a consequence, in the ProjectN plant that to be built. Extending this investment opportunity to U.S. farmers completes the initial investigation and structuring stages of ProjectN. It is expected that FNA FLP will collectively hold the Canadian and U.S. farmers’ interests in the entity that will own the nitrogen fertilizer plant. It is also expected that such farmers, in addition to being provided an early investment opportunity in the subsequent capital financing that will be required to build the plant, may obtain additional benefits (See the answer to “What do I get for my seed capital money?” below).
Q: What are Members being asked to do?
A: We need you to show your commitment in a tangible way by purchasing a seed capital share in FNA Fertilizer USA ULC, the entity established specifically to facilitate investment by U.S. farmers in a farmer-owned nitrogen fertilizer plant (“ProjectN”). Completing the expression of interest form is an important step. To take on a venture like this requires millions of dollars, and several levels of financing and partners. Investors with financing capital needed to make this project a reality are looking to see that farmers are involved and committed to the project.
To join ProjectN right now, Click on Let’s Build It! and, fill out our Expression of Interest form to help establish the base of support for building the plant. Alternatively, call our toll free number at 1.844.289.2472.
Q: Why use a ULC structure for US investors?
• Unlimited Liability Companies (“ULC”) have become useful vehicles for the acquisition of a Canadian business by U.S. investors.
• ULCs have commonly been used by US persons investing in Canada on a greenfield basis or through corporate acquisitions of Canadian entities
• A ULC will be treated as a partnership for U.S. tax purposes as the U.S. tax rules “look through” the ULC to its shareholder(s). In contrast, for Canadian tax purposes, a ULC is treated as a corporation, and is subject to tax at the corporate level.
• An important advantage to a U.S. investor investing in a Canadian limited partnership through a ULC is that for U.S. tax purposes any Canadian source losses realized by FNA Fertilizer USA ULC from its investment in FNA FLP can be flowed through to the U.S. investors. A U.S. investor will not be required to file any Canadian tax returns. Also, Canadian taxes, if any, payable by FNA Fertilizer USA ULC should be available to be claimed as a foreign tax credit by U.S. investors.
Q: What are the funds obtained from the sale of Seed Capital Shares to be used for?
The funds raised from the sale of Seed Capital Shares will be used to develop ProjectN to a stage where we can present a cohesive plan to farmers, lenders and other parties for subsequent and more substantial rounds of financing that will finance the actual building and operation of the fertilizer plant. The seed capital funds will be used to pay for activities such as environmental studies, civil and environmental engineers, securities-related regulatory costs, and legal fees. We have engaged experts that will review and advise us as to the best investment models to make this proposal work, provide access to key relationships and develop a project model that is both financeable and profitable.
Q: How much does a Seed Capital Share cost?
A: A Seed Capital Share costs $1,000 per share. You can contribute in multiples of $1,000, and purchase up to a maximum of ten shares.
Q: Why can I buy only 10 Seed Capital Shares?
A: While we need the seed capital investment to cover the costs associated with project development, we also want to provide as many people as possible with the opportunity to participate without putting overbearing risk on any given individual or entity.
Q: What do I get for my seed capital money?
A: You will get an direct interest in the ProjectN business – through FNA Fertilizer USA ULC and FNA FLP. When the nitrogen fertilizer plant project proceeds, your participation in ProjectN will allow farmers who have purchased Seed Capital Shares (or seed capital units, in the case of Canadian farmers) certain benefits. The nature of such benefits have not yet been determined, but may include: The right to make an early equity investment in the fertilizer plant on preferred terms; MPower Rewards; rebates on products provided through FNA suppliers; or discounted pricing on fertilizer produced by the plant. These benefits will not be obtained if farmers have not already demonstrated a sufficient level of commitment to ProjectN.
Eventually, when the fertilizer plant is built and in production, ProjectN will allow farmers access to a secure supply of nitrogen fertilizer.
Q: What has been accomplished to date?
• The plant site has been selected at Belle Plaine, Saskatchewan with access to some of the world’s least expensive natural gas supplies, extensive existing infrastructure including pipelines, road and rail transport, and water supply, and in the context of a stable regulatory environment and supportive governments.
• The Stage 1 Bankable Feasibility Study (“BFS”) has been completed by Stantec Engineering – an extensive document containing business and financial modeling that is intended to be sufficiently compelling to qualify the project as “bankable” by the financial community.
• The Technical Project Proposal (required by government), which includes environmental studies and other regulatory data, has been completed.
• Over 2,500 farmers have backed the project investing in more than 9,000 FNA FLP seed capital units.
• Key relationships have been established, such as engaging capital development, engineering, legal and business modeling partners.
Q: What information can farmers expect to receive as holders of Seed Capital Shares?
A: ProjectN investors will be provided ongoing updates from time to time as to the progress being made on the project, usually in the form of emails or notices to log in to portions of the project website reserved solely for holders of such interests. As an FNA member, you can have daily access to your Member Services Manager, so you can just call if a question comes to mind.
Q: Is this a guaranteed investment?
A: No. The Seed Capital Share investment is risk capital, and the funds collected are being spent on the type of preliminary activities and investigations that are necessary to confirm the financial viability, structure and nature of ProjectN and to bring in additional third parties. There is no guarantee that the nitrogen fertilizer plant will be built or that ProjectN investors will receive any return on their Seed Capital Shares.
Q: What still needs to be accomplished?
The most pressing items are:
• A number of government permits have to be obtained.
• A strategic partner needs to be selected to provide the capital investment component not taken up by farmers.
• The Front End Engineering Design (“FEED”) has to be completed. Once the strategic partner is selected, the technology provider can be picked and a more detailed engineering and design can commence.
• We need to book long lead items. Long Lead items are those equipment components of the plant for which the times to design and fabricate are the longest and for which a commitment of funds may be desirable or necessary in order to meet the earliest possible date of project completion.
• The equity capital for the farmer ownership component must be raised.
Q: Why has FNA undertaken this initiative?
A: The primary reason for the FNA farm business alliance to engage in ProjectN is to provide an opportunity for FNA members to benefit from the profits in fertilizer manufacturing. FNA is responding to our members who have asked us to get involved. We help maximize profitability in ten key areas, and fertilizer is at the top of the list.
There are additional benefits to this project for FNA, which include:
• Increased support from existing membership for leading this project.
• New membership growth – We expect to see the membership grow significantly, with new Canadian and U.S. farmers participating in FNA. As FNA gains more members, it will be able to take on more projects like this for its members.
• Increased attention in the industry that may lead to other opportunities for members.
Q: Why Western Canada?
A: For a number of reasons. Here are a few:
1. We engaged Integer a world renowned fertilizer research firm out of the UK who did cost of production benchmarking across North America and plants in western Canada are consistently lower than plants in the rest of the continent.
Company Location Cost of Production
per tonne of Urea (US$)
CF Industries Medicine Hat AB $151.60
YARA Belle Plaine SK $138.30
Agrium Redwater AB $148.40
CF Industries Donaldsonville LA $157.30
PCS Lima OH $171.40
ProjectN Belle Plaine SK $136.00
2. Saskatchewan has one of the lowest corporate tax regimes in North America. Canada’s federal tax is lower than the USA federal corporate tax;
3. Natural Gas in Western Canada is priced off of AECO where most other locations are priced off of Henry Hub. “AECO consistently has a lower price differential than Henry Hub” .
Q: Who will own and operate the plant?
A: The plant itself will be owned and operated by a new entity that will be established in the future. That entity will be owned by a combination of farmers (through FNA FLP), one or more strategic partners and an entity under common control with FNA. FNA FLP will effectively be owned by Canadian farmers as limited partners and managed by a general partner that will be a corporation under common control with FNA. FNA Fertilizer USA ULC will be owned by U.S. farmers. It will be staffed by senior individuals from FNA to ensure that it maintains an overall unity of purpose with FNA FLP and FNA and its membership.
Q: What portion of the plant will farmers own?
A: This is entirely in the hands of FNA members. There is no cap on the share of the plant owned by farmers. The more farmers that participate and the more they invest, the larger share farmers will own. The project is developing financing options for members to strengthen their ability to take as much of the equity as possible. At the same time, serious equity and debt participation by major industry and institutional players is being prepared. Exactly what piece each party owns will be determined only after members have been given a full opportunity to make their own decisions.
Q. I'm not a Member of FNA. How can I participate?
A: Because it is membership dues of FNA Members that allowed ProjectN to initially be developed, we are committed to ensuring that FNA members derive preferential benefits from the project. So, at this stage, only FNA Members are being allowed to get in on the ground floor of investment with ProjectN. If you are a farmer, but not yet an FNA member, you can start your participation by first joining FNA.
Q: Who should I make the check payable to?
A: FNA Fertilizer USA ULC.
Q: Can I pay by credit card?
A: We are currently looking at setting up a credit card merchant account for FNA Fertilizer USA, however, for now you can only pay by check. The mailing address is:
375 East Horsetooth Rd.
Building 5, Suite 202
Fort Collins, Colorado 80525