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Rentech Nitrogen Partners, L.P. To Acquire Fertilizer Producer Agrifos LLC; Secures Debt Financing Commitments For The Purchase

The plant’s approximate production capacity on an annual basis is currently 575,000 tons of ammonium sulfate; 570,000 tons of sulfuric acid, of which 139,000 tons are available for sale and the remainder of which is upgraded to ammonium sulfate; and 57,000 tons of ammonium thiosulfate. AS production capacity is expected to increase to approximately 690,000 tons per year in the first half of 2014 upon completion of the first identified and financed growth project at the plant.

The plant is strategically located on approximately 85 acres in Pasadena, Texas, with 6,200 feet of frontage on the Houston Ship Channel; 2 deep-water docks, providing access to key waterways for international shipments, low-cost barge access to the Mississippi waterway system, and significant supply of key raw materials. The site has immediate access to railways serviced by BNSF and Union Pacific, which is advantageous for distributing products west of the Mississippi and realizing favorable transportation costs.

Other assets being acquired include solid fertilizer warehouses, an ammonia dock and tank, and product storage facilities and tanks.

The facility and site provide a number of opportunities for organic growth in cash flows from the acquisition.

Transaction Highlights

Ammonia hedge for East Dubuque facility

As an ammonia upgrading plant, the Pasadena facility consumes approximately the same amount of ammonia as the East Dubuque facility sells. Agrifos purchases ammonia based on Tampa prices, which are lower than the Corn Belt prices at which the East Dubuque facility sells ammonia. This should allow the consolidated business to capture the premium between Tampa and Corn Belt pricing, while reducing the consolidated exposure to the variability in ammonia prices.

Margin stability

Ammonium sulfate prices have historically been more stable than have the prices for the principal products of the East Dubuque facility. Margins have also been more stable, as the prices for ammonium sulfate have been correlated with those of ammonia and sulfur, the two principal inputs for the Pasadena plant.

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