Posts By Date - Green Markets

Rentech to acquire Agrifos

November 1, 2012Breaking Industry Newswebster@kennedyinfo.com

Rentech Inc. today announced that its majority-owned subsidiary, Rentech Nitrogen Partners LP, 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.”

LSB buys natural gas assets

LSB Industries Inc. has announced that as a part of the Chemical business hedging strategy to protect against rising natural gas prices, a subsidiary within LSB’s Chemical business closed an acquisition of a working interest in certain natural gas properties at a cost of $49 million. The acquisition included an approximate 7.7 percent average working interest within the Marcellus Shale, located in Wyoming County, Pennsylvania. The purchase includes interests in 14 proved producing natural gas wells, 7 proved non-producing natural gas wells, and 36 proved undeveloped future drilling locations identified on the leasehold. LSB expects to spend $38 to $40 million from the expected cash flows from the producing wells for additional capital expenditures to fully develop its share of these leaseholds through 2015.

LSB’s Chemical business considers this acquisition as a hedge against potential natural gas price increases in the future for a portion of its chemical plants’ future natural gas feedstock requirements. The purchase price was funded by utilizing cash on hand. LSB is considering financing a portion of the acquisition price from a third party in the near term.

In commenting on the acquisition, Jack E. Golsen, Board Chairman and CEO stated that “Our Chemical business has the capacity at their Alabama and Oklahoma facilities to consume over 12 million mcf of gas annually in the production of nitrogen products, including anhydrous ammonia and urea ammonium nitrate. This acquisition includes potential gas reserves equal to approximately 20 percent of our current annual natural gas requirements over the next 8 years at an estimated present value cost of approximately $2.30 per mcf, including development and operating costs.”