Los Angeles-Rentech Inc. said Jan. 15 that its wholly-owned subsidiary and nitrogen company, Rentech Energy Midwest Corp., reached agreement with its lenders regarding amendments to certain terms of its senior credit agreement, under which it borrowed $53 million in June 2008. Rentech said the amendments temporarily reduce the mandatory prepayments and minimum liquidity requirements at REMC. These amendments will help enable REMC’s cash flows to fund Rentech’s consolidated liquidity needs for fiscal year 2009. As consideration, Rentech and REMC agreed to pay $450,000 in cash fees to its lenders and advisors, increase the interest rate on the loan by one percentage point, and issue to the lenders 4,993,379 warrants with an exercise price of $0.92. Of the warrants, 3,745,035 will have a life of five years, while 1,248,344 will expire on the maturity date of the loan unless the loan is repaid in its entirety by June 30, 2009, in which case these warrants would expire unexercised. Rentech continues to project fiscal year 2009 net income of over $33.1 million and EBITDA over $50 million due to anticipated strong spring pricing and demand for nitrogen fertilizer products in the Midwest, as well as the fact that a significant portion of REMC’s fiscal year’s production has already been presold. In addition, REMC last week confirmed that maintenance has been moved up and that the East Dubuque facility has a partial curtailment.
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