Rentech Nitrogen Partners, L.P. (NYSE: RNF) announced today that it has entered into a definitive agreement with Agrifos Holdings Inc. to purchase all of the membership interests of Agrifos LLC, for an initial purchase price of $158 million. Agrifos owns and operates a plant in Pasadena, Texas, that produces primarily ammonium sulfate fertilizer. The initial consideration is to consist of $138 million of cash, to be provided through an amended credit facility, and $20 million of common units of Rentech Nitrogen. The acquisition is expected to be accretive to cash available for distribution per unit beginning in 2013. Rentech Nitrogen will host a conference call today at 7:00 a.m. PDT to provide additional details regarding the transaction.
“We are extremely pleased to announce our first acquisition, one year after Rentech Nitrogen became a public company. Agrifos’ business is expected to provide incremental cash flow and diversifies the products, markets, location, and raw materials of our existing natural gas-based nitrogen fertilizer plant in East Dubuque, Illinois,” said D. Hunt Ramsbottom, CEO of Rentech Nitrogen GP, LLC. Mr. Ramsbottom continued, “Not only do we expect this business to be accretive to cash available for distribution beginning in 2013, but the facility comes with several growth opportunities, the first of which we have included in our financing package for this transaction. This growth at the Pasadena plant would add to the growth in cash flow that we expect from the expansion projects currently underway at Rentech Nitrogen’s existing fertilizer plant.”
The Agrifos facility is the third largest producer of ammonium sulfate fertilizer, or AS, in North America, and the largest producer in North America of synthetic granulated AS. The plant’s other products include ammonium thiosulfate fertilizer, or ATS, and sulfuric acid, or SA. The plant uses ammonia and sulfur as raw materials to produce these products. Product margins and seasonality of sales are generally less variable than those of ammonia, with premium pricing received for Agrifos’ superior quality AS product. The products are sold through distributors to customers within the U.S. and Brazil. AS and ATS are typically blended with other nitrogen, phosphate, potash, and potassium fertilizers for application to a variety of crops to maximize yields and maintain nutrient balance within crops. SA is utilized for industrial purposes.