LOS ANGELES--(BUSINESS WIRE)--Rentech, Inc. (NYSE AMEX: RTK) today announced that Rentech Energy Midwest Corporation (REMC), its wholly-owned nitrogen fertilizer subsidiary, closed $150 million of debt financing.
The robust prospects of the nitrogen fertilizer market supported REMC’s ability to significantly increase its borrowing capacity and improve credit terms, including a lower interest rate. The new term loan requires periodic amortization payments, and has a final maturity date of June 10, 2016. Credit Suisse Securities (USA) LLC was the sole arranger of the loan.
The debt financing replaces REMC’s outstanding term loan of approximately $85 million. Pro forma for the new loan, Rentech’s consolidated cash balance as of March 31, 2011 would have been approximately $124 million, with approximately $20 million held at REMC. Upon closing of the debt financing, Rentech received a distribution of approximately $67 million, composed of net financing proceeds of approximately $47 million and $20 million of excess cash that was available at REMC. A reconciliation of Rentech’s pro forma consolidated cash balance to its actual cash balance as of March 31, 2011 is included below in this press release.
With the increased liquidity, Rentech is well positioned to fund continued development of the Company’s synthetic fuels and power projects and other corporate needs.
“The significant increase in REMC’s borrowing capacity and the improved terms of the credit agreement reflect the credit market’s confidence in REMC’s outlook. The resulting strong liquidity position provides Rentech with a significant amount of capital to pursue commercial opportunities to increase shareholder value,” said Dan Cohrs, Executive Vice President and Chief Financial Officer of Rentech. Mr. Cohrs continued, “Rentech’s management is enthusiastic about the prospects of REMC, which benefits from strong industry fundamentals and premium product pricing, due to its location in the heart of the Corn Belt.”
Disclosure Regarding Non-GAAP Financial Measures
Management believes that including the Company’s pro forma consolidated cash balance will provide investors with additional information regarding the Company’s liquidity on a consolidated basis. A reconciliation of the Company’s consolidated cash balance as of March 31, 2011 to its pro forma cash balance as of March 31, 2011 after giving effect to the closing of the new term loan at REMC on June 10, 2011 is below:
| Pro Forma Cash Balance Reconciliation | ||||||
| ($ in millions) | ||||||
| March 31, 2011 Actual Consolidated Cash Balance: | $ | 77 | ||||
| New Term Loan-Net of Financing Fees | 142 | |||||
| Repayment of Principal on Previous Loan | (85 | ) | ||||
| Prepayment Penalty on Previous Loan | (8 | ) | ||||
| Accrued Interest on Previous Loan | (2 | ) | ||||
| Pro Forma March 31, 2011 Cash Balance | $ | 124 | ||||
About Rentech, Inc.
Rentech, Inc. (www.rentechinc.com), incorporated in 1981, provides clean energy solutions. The Company's Rentech-SilvaGas and Rentech-ClearFuels biomass gasification processes can convert multiple cellulosic biomass feedstocks into synthesis gas (syngas) for production of renewable fuels and power. Combining the gasification processes with Rentech's unique application of syngas conditioning and clean-up technology and the patented Rentech Process based on Fischer-Tropsch chemistry, Rentech offers an integrated solution for production of synthetic fuels from cellulosic biomass. The Rentech Process can also convert syngas from fossil resources into ultra-clean synthetic jet and diesel fuels, specialty waxes, and chemicals. Final product upgrading and acid gas removal technologies are provided under an alliance with UOP, a Honeywell company. Rentech develops projects and offers licenses for these technologies for application in synthetic fuels and power facilities worldwide. Rentech Energy Midwest Corporation, the Company's wholly-owned subsidiary, manufactures and sells nitrogen fertilizer products including ammonia, urea ammonia nitrate, urea granule, and urea solution in the corn-belt region of the central United States.
Safe Harbor Statement
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 about matters such as the outlook of Rentech Energy Midwest Corporation; the demand, pricing and outlook for REMC’s products; the anticipated use of proceeds from the debt financing; the projected flexibility and liquidity of the Company; and the financial returns and impact of commercial projects. These statements are based on management's current expectations and actual results may differ materially as a result of various risks and uncertainties. Other factors that could cause actual results to differ from those reflected in the forward-looking statements include the possibility that Rentech may elect to pursue activities beyond its current budget, the possibility that Rentech may be unable to raise the additional capital necessary to finance such additional activities or the completion of its proposed projects, fluctuations in commodities prices including the price of oil and the materials necessary to construct projects, the impact of changing government regulations on the project permitting process, the qualification of renewable power and fuels and market demand and pricing for REMC’s products and factors set forth in the Company's press releases and periodic public filings with the Securities and Exchange Commission, which are available via Rentech's web site at www.rentechinc.com. The forward-looking statements in this press release are made as of the date of this release, and Rentech does not undertake to revise or update these forward-looking statements, except to the extent that it is required to do so under applicable law.