Rentech Nitrogen Partners, L.P. Completes Acquisition of Fertilizer Producer Agrifos LLC; Closes $300 Million Amended Senior Secured Credit Facilities
Rentech Nitrogen Partners, L.P. (NYSE: RNF) announced today that it has completed its previously announced acquisition of Agrifos LLC, the leading producer of synthetic granulated ammonium sulfate fertilizer in North America. Agrifos' fertilizer production facility is located in Pasadena, Texas. The business will become a subsidiary of Rentech Nitrogen.
Rentech Nitrogen reiterated its expectation that the Agrifos transaction will be accretive to cash available for distribution per unit beginning in 2013. Based on the timing of the close, the transaction is expected to have an immaterial impact on Rentech Nitrogen's per unit cash distribution for the fourth quarter of 2012. Rentech Nitrogen also reiterated its expectation that the Pasadena facility will generate approximately $20 million in operating income and approximately $25 million in EBITDA in 2013, excluding one-time integration and transition costs (as described in its press release dated November 1, 2012).
In conjunction with the closing of this acquisition, Rentech Nitrogen amended its existing debt facility, and expanded its borrowing base from $135 million to $300 million. The amended facility includes an accordion feature to expand the debt capacity by $35 million, subject to new lending commitments, to finance future growth projects. GE Capital served as administrative agent and GE Capital Markets served as sole lead arranger and book-runner for the debt facilities.
The initial purchase price of the acquisition was $158 million. $138 million of the initial purchase price was provided in cash through the amended credit facility. The remainder of the purchase price was provided in the form of 538,793 common units of Rentech Nitrogen, valued at $20 million based on the 30-day volume-weighted average price of the common units prior to signing the acquisition agreement.
“We are excited to bring this strategic facility into Rentech Nitrogen's portfolio of assets. We expect its integration to proceed quickly and smoothly and we intend to initiate our first planned organic growth project at the Pasadena plant shortly,” said D. Hunt Ramsbottom, CEO of Rentech Nitrogen GP, LLC. “The Pasadena plant's assets are a tremendous fit with our existing business platform, adding to our cash flow per unit and diversifying our business.”
Dan Cohrs, CFO of Rentech Nitrogen GP, LLC, stated, “These expanded credit facilities give us flexibility to fund our capital program, both at East Dubuque and at our new Pasadena facility. We continue to have a $35 million undrawn revolver and a comfortable cash balance. The cost of capital, at LIBOR+375, is significantly lower than issuing new units for the acquisition. The excess proceeds of the term loan and the new $10 million capital expenditures facility help us to fund required capital at the Pasadena plant. We expect the acquisition to increase our cash distributions per unit, even after we make amortization payments that directly benefit the value of the equity.”
Imperial Capital, LLC and BMO Capital Markets acted as financial advisors to Rentech Nitrogen in connection with the transaction.
About Rentech Nitrogen, L.P.
Rentech Nitrogen (www.rentechnitrogen.com) was formed by Rentech, Inc. to own, operate and expand its nitrogen fertilizer business. Rentech Nitrogen's assets consist of two fertilizer production facilities. Rentech Nitrogen's East Dubuque facility is located in the northwestern corner of Illinois, and uses natural gas as a feedstock to produce primarily anhydrous ammonia and urea ammonium nitrate solution for sale to customers in the Mid Corn Belt. Rentech Nitrogen's Pasadena facility is located along the Houston Ship Channel in Texas. Rentech Nitrogen's Pasadena facility is the largest producer of synthetic granulated ammonium sulfate fertilizer in North America, with sales in the United States and South America. The Pasadena plant's other products, which are sold domestically, include ammonium thiosulfate fertilizer and sulfuric acid. The plant uses ammonia and sulfur as its primary feedstocks.
Forward Looking Statements
This press release contains forward-looking statements such as: forecasted EBITDA, operating income, accretion and cash balance; the outlook for the business; successful integration and future performance of acquired assets or businesses; and successful implementation and execution of potential internal growth projects. These statements are based on management's current expectations and actual results may differ materially as a result of various risks and uncertainties. Other factors that could cause actual results to differ from those reflected in the forward-looking statements are set forth in Rentech Nitrogen's prior press releases and periodic public filings with the Securities and Exchange Commission, which are available via Rentech Nitrogen's website at www.rentechnitrogen.com. The forward-looking statements in this press release are made as of the date of this press release and Rentech Nitrogen does not undertake to revise or update these forward-looking statements, except to the extent that it is required to do so under applicable law.
Rentech Nitrogen Partners, L.P.
Julie Dawoodjee Cafarella
Vice President of Investor Relations and Communications