Orlando-Sherwood Investments Overseas Ltd., which holds a 3 percent stake in Rentech Inc., said June 24 that it is still not happy with the performance of Rentech’s stock. Sherwood says that it offered $2.28 per share for the company’s stock six months ago, yet the stock continues to languish at a considerable discount. The shares closed at $1.55 July 15, down from $1.81 on June 24, when Sherwood Principal Julian Benscher sent a letter to Rentech President and CEO Hunt Ramsbottom saying that Rentech should remove its poison pill, eliminate staggered board terms, and appoint an independent director who will work tirelessly to represent the interests of stockholders. “You should also consider a spinoff of the fertilizer operation,” said Benscher. He said as a standalone public company, the fertilizer business, which operates a nitrogen plant at East Dubuque, Ill., would be worth at least $3 per share. He noted that the unit has expected EBITDA of $40 million for the year ending Sept. 30, 2008. “With oil and fertilizer prices at historic highs, Rentech is poised to enter a new phase of explosive growth and profitability. We urge you to immediately address your corporate structure so that your shareholders can reap the benefits that should be forthcoming.” Benscher said that license revenues from the company’s synthetic fuels technology will start rolling in during the fiscal year beginning in October, and that these should exceed research and development costs. As a result, for the first time in company history, the quest for synthetic fuels will not be a drag on corporate earnings. He noted that the technology can deliver aviation and diesel fuel at a price that is commercially viable when oil is at $60 per barrel.
Transparency Across the Fertilizer Value-Chain