- RTK's historical business plan has utilized cash distributions from RNF to invest in enterprises unrelated to RTK's core RNF Nitrogen fertilizer business and which, in the aggregate, has generated a sizable cumulative deficit for RTK and reduced value on an absolute and relative basis for RNF holders; 2 ,3
- RNF remains captive inside RTK, which should be resolved to maximize value - the Dolphin III Plan addresses this. Dolphin believes that greater consideration is required of RNF's relative size (approximately 1.0 million annual metric tons of Ammonia, UAN and liquid and granular Urea - excluding other products and the Pasadena, Texas, Agrifos facility - and an approximate $.9 billion current TEV) to that of its competitors, premium pricing from its mid-corn-belt location and proximity to customers and natural gas. Resolving the highly inefficient RTK/RNF structure would enhance RNF as an attractive acquisition candidate -- especially to cross-border competitors 2;
- RTK and RNF appear significantly undervalued on absolute and relative terms; --Since December 31, 2012, the percentage decline in RNF's total return (unit price plus distributions) -- is approximately (-50%) vs. (-2%) for the average total return of the seven other publicly traded peers. RNF's percentage decline is over 2 x's that of the next worst performing peer 3; --RNF's current TEV approximates 50% of the estimated net replacement value of its facilities when certain competitors have indefinitely delayed greenfield projects 4, highlighting the acquisition value of existing strategic operating assets;-- The pre-tax intrinsic value of RTK's net assets, with RNF units at $16.32 and RTK's other net assets valued at $1.63 per share, is approximately $2.95 per share. Yesterday, RTK closed at $2.43 5; --The pre-tax intrinsic value of RTK's net assets with RNF units at $30 (a TEV approximating 75% of RNF's estimated net replacement value) is approximately $4.05 per share, more than a 65% increase from yesterday's closing price 5.--The public analysis provided by RNF for 2014 EBITDA indicated a cash distribution of approximately $2.40 per unit, or over a 14% current yield -- materially greater than any other public sector MLP or corporate peer. 3,5
Dolphin III Seeks RTK/RNF Value Maximizing Strategic Alternatives Process; A Rapid Spin-Off Of RTK's Wood Fibre Businesses -- Sees Significant RTK Share Upside
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