Rentech Secures $150 Million Debt Financing
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.
“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.”
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.”
Full news release is here.