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Rentech Announces Its Subsidiary Rentech Nitrogen Will Acquire Fertilizer Producer Agrifos LLC

Stocks in this article: RNFRTK

Rentech, Inc. (NYSE MKT: RTK) today announced that its majority-owned subsidiary, Rentech Nitrogen Partners, L.P. (NYSE: RNF), 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 acquisition is expected to be accretive to cash distributions per unit paid by Rentech Nitrogen to its unitholders beginning in 2013. Rentech currently owns 23.25 million units of Rentech Nitrogen, a publicly-traded partnership that owns a nitrogen fertilizer manufacturing plant located in East Dubuque, IL.

In conjunction with the closing of this transaction, Rentech Nitrogen has secured commitments from its existing and new lenders to amend its existing debt facility, and expand its borrowing base from $135 million to $300 million. The debt facility will continue to be guaranteed by Rentech Nitrogen. The transaction, which is subject to customary closing conditions, is anticipated to close within one week of the date of this announcement.

Commenting on the transaction, D. Hunt Ramsbottom, CEO of Rentech and Rentech Nitrogen GP, LLC, stated, “We’re very pleased to have executed on this transaction. Growing Rentech Nitrogen is one of the pillars of our strategy to enhance returns for Rentech shareholders.” Mr. Ramsbottom continued, “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. 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.”

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