LOS ANGELES--(BUSINESS WIRE)--Rentech, Inc. (NYSE AMEX: RTK) announced today that it has given notice of exercise of its option to acquire additional equity in ClearFuels Technology Inc. (ClearFuels). Upon closing of the transaction, Rentech would own a substantial majority of the equity of ClearFuels, with existing ClearFuels investors retaining a minority interest. The transaction will be accomplished through the merger of a subsidiary of Rentech into ClearFuels, with ClearFuels continuing as the surviving company in the merger. The option was exercised pursuant to the terms of an option agreement signed by the two companies in September 2010. The merger is expected to close within a month. The companies expect no interruption of the project and technology development activities of ClearFuels.
At present, Rentech owns 25% of ClearFuels, a project development company with proprietary reformation technology for the gasification of biomass. Under a Project Support Agreement signed in September 2010, Rentech assumed control of the two companies’ joint integrated bio-refinery project which is being funded in part by a $23.0 million grant from the U.S. Department of Energy. The grant is partially funding construction of a demonstration-scale ClearFuels biomass gasifier at Rentech’s Energy Technology Center (RETC). Upon completion late this year, the gasifier will be integrated with Rentech’s Product Demonstration Unit (PDU) to produce certified renewable synthetic jet and diesel fuels from cellulosic biomass feedstocks.
With the successful demonstration of the ClearFuels gasifier at Rentech’s PDU, Rentech will be able to offer the market an integrated solution, based on the ClearFuels reformation technology, for the conversion of cellulosic biomass feedstocks such as bagasse and other virgin biomass into high-value energy products such as certified low-carbon renewable synthetic jet and diesel fuels. These drop-in fuels are expected to qualify for renewable identification numbers (RINs) as cellulosic fuels and to command premium value for their low carbon and renewable attributes.
ClearFuels is developing potential biomass-to-energy projects in the Southeastern U.S., Hawaii and internationally that would use the integrated ClearFuels-Rentech design and be co-located at sugar mills and wood processing facilities. The ClearFuels-Rentech design can be deployed to help achieve compliance with the European Union’s Emissions Trading Scheme as well as other low carbon fuels standards and renewable mandates.
ClearFuels is in active negotiations with Hawaiian Electric Company, Inc. (HECO) for a long-term conditional off-take contract for renewable diesel for fueling of a power generator to be produced at its proposed Hawaii project that would utilize the ClearFuels biomass gasification process and Rentech’s synthetic fuels technology to produce synthetic diesel fuel from bagasse. Any agreement that results from these negotiations would be contingent upon approval by the Hawaii Public Utilities Commission. ClearFuels plans to continue its negotiations with HECO, and pursue the development of the Hawaii project, with the full support of Rentech.
Consideration for the shares of ClearFuels to be acquired by Rentech consists of the obligations taken on by Rentech in the Project Support Agreement to support the construction of the ClearFuels technology at Rentech’s PDU. In connection with the transactions contemplated by the option agreement and the Project Support Agreement, Rentech will also issue a warrant to purchase approximately two million shares of Rentech common stock and provide the minority shareholders in ClearFuels with a carried interest in the Hawaii project, if that project is successfully developed.
Commenting on the acquisition, D. Hunt Ramsbottom, President and Chief Executive Officer of Rentech, stated, “We’re excited to work even more closely with the ClearFuels team to support their development and technology. We now add the ClearFuels biomass gasifier to our suite of energy conversion technologies, which includes the Rentech-SilvaGas biomass gasifier and Rentech’s process to produce drop-in fuels from synthetic gas. Rentech can offer multiple integrated systems to convert a wide variety of cellulosic materials into renewable low-carbon fuels certified for commercial aviation and ground vehicles.” Mr. Ramsbottom continued, “Our drop-in renewable diesel and jet fuels can help address the world’s low-carbon energy needs.”
ClearFuels CEO, Eric Darmstaedter, commented, “We look forward to continuing our project and technology efforts with the support of Rentech. We are on schedule to produce, in less than 8 months, renewable jet and diesel fuels from mixed biomass feedstocks using the integrated ClearFuels-Rentech technologies. Demonstration of this integrated technology will promote our development efforts in Hawaii and on the mainland.” He added, “The DOE demonstration project is also the gateway to integration of the ClearFuels biomass reformation technology with a variety of other advanced biofuels technologies that can bring added value.”
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 biomass feedstocks into synthesis gas (syngas) for production of renewable fuels and power. Combining the gasification process 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 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 licenses 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. Rentech has been recognized by Biofuels Digest as one of the “50 Hottest Companies in Bio-energy” and has been named as one of the “Biofuels Digest Companies of the Year” for its innovations and achievements, particularly in aviation biofuels.
About ClearFuels Technology, Inc.
ClearFuels Technology Inc. (www.clearfuels.com) and its partners are developing advanced sustainable biorefineries that convert multiple mixed cellulosic biomass feedstocks into sustainable, high-value energy products including renewable Fischer-Tropsch (FT) diesel and jet fuel, ethanol, hydrogen and power at industry-leading yields. The ClearFuels proprietary thermochemical conversion process is based on its advanced High Efficiency Hydrothermal Reformation (HEHTR) technology for biomass-to-syngas conversion (BTG). This modular flexible BTG technology platform, in combination with various synthetic gas-to-liquid (GTL) technologies and co-location of its biorefineries at sugar mills, and at wood processing and other biomass processing facilities, provides a reduced risk, lower overall cost commercial strategy in line with ClearFuels’ vision for production of clean clear biofuels.
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 ClearFuels biomass gasification technology, the ability to integrate the gasification technology with Rentech technologies and the timing of the completion of the demonstration, the characteristics of the renewable fuels to be produced from the technologies, and ClearFuels’ proposed development projects using integrated technologies. 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 ability of the parties to create and successfully market a combined technology offering, the financial means of Rentech and ClearFuels to build their proposed projects, fluctuations in commodities prices including the price of oil and the materials necessary to construct a project, the impact of changing government regulations on the project permitting process and the qualification of renewable fuels 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.