FREEPORT TO TAKE OVER MANAGEMENT OF FERTILIZER COMPANY IN SPAIN

FREEPORT TO TAKE OVER MANAGEMENT OF FERTILIZER COMPANY IN SPAIN

Spanish chemicals group Ercros SA said Tuesday that Freeport McMoRan Inc. of the United States had agreed to take over management of its money-losing fertilizer division for one year.

Ercros said Freeport would begin managing Fertiberia, a newly created company that groups together Ercros' fertilizer operations, effective Friday.FESA-Enfersa, whose massive losses forced Ercros into receivership in July 1992, is the chemical group's main fertilizer unit.

Freeport also signed a parallel agreement pledging to make a "substantial investment" in Fertiberia to gain "effective control" of the company if, after the one-year trial period, it proves viable.

Freeport isn't obliged to make any cash injections before October 1994, Ercros said.

"At any rate, Freeport does not assume the obligation of any financing of the new company during the management contract," Ercros said.

Ercros said Fertiberia would incorporate FESA's production assets, while FESA would be transformed into a holding company for nonproduction assets and outstanding loans.

The agreement signed Tuesday ends more than 18 months of negotiations between Freeport and Ercros, which is controlled by the Kuwait Investment Office.

In the last year FESA has implemented a sweeping restructuring plan that included dismissing 1,500 workers and has secured agreements from creditors to

allow it to end its suspension of payments.

In response to the reorganization, state lending body Instituto de Credito Oficial released the first of an expected 10 billion pesetas ($100 million) in loans to FESA at the start of September.

Tuesday's statement made no mention of Moroccan company Office Cherifien de Phosphates, which previously had expressed interest in acquiring a stake in FESA-Enfersa.

The agreement with Freeport is part of Ercros' ongoing attempts to unload assets. At the start of July, Ercros sold its pharmaceutical company, Fermentaciones & Sintesis Espanola SA, to Spanish holding company Corporacion Zortox SA.

Earlier this year, Freeport bought Ercros' mining unit, Rio Tinto Minera SA.