RENTECH, INC. Rentech, Inc. (NASDAQ: RTK) announced today that its subsidiary, New England Wood Pellet (NEWP), has acquired the assets of Allegheny Pellet Corporation (Allegheny). The acquisition expands NEWP’s market position as the largest producer of wood pellets for the U.S. heating market.
“Consistent with the growth strategy we outlined when we acquired NEWP, we are pleased to expand NEWP’s platform with the acquisition of Allegheny,” said Sean Ebnet, senior vice president of Rentech’s wood fibre business.
Allegheny’s wood pellet plant in Youngsville, Pennsylvania has been operating since 1993. The facility processes residuals from local sawmills into wood pellets for sale through big box stores, specialty retailers and bulk sales channels. The plant has historically experienced relatively stable feedstock costs due to a consistent supply of residuals within an economic haul radius of the facility. Allegheny’s customers are responsible for the costs and logistics arrangements of pellet deliveries. Allegheny will be fully integrated into NEWP and will operate as its fourth pellet plant.
NEWP intends to expand the plant’s annual production from approximately 36,000 tons under a four-day workweek to approximately 50,000 tons under a seven-day workweek. The additional production will help meet strong demand for pellets in Pennsylvania and New York. Allegheny is expected to generate approximately $10 million in revenues and $1.5 million in EBITDA annually once operating full-time.
NEWP acquired all of the assets of Allegheny for approximately $7 million in cash, using the proceeds of a 5-year, $8 million term loan from TD Bank, N.A. The term loan amortizes over 7 years, has an interest rate of LIBOR plus 2.25 percent, and contains financial covenants that may restrict distributions from NEWP to Rentech.
NEWP expects to invest over the next 2 years approximately $2 million of available cash in environmental and safety improvements at the plant.
About Rentech, Inc.
Rentech, Inc. (NASDAQ: RTK) owns and operates wood fibre processing, wood pellet production and nitrogen fertilizer manufacturing businesses. Rentech offers a full range of integrated wood fibre services for commercial and industrial customers around the world, including wood chipping services, operations, marketing, trading and vessel loading, through its subsidiary, Fulghum Fibres. The Company’s New England Wood Pellet subsidiary is a leading producer of bagged wood pellets for the U.S. heating market. Rentech manufactures and sells nitrogen fertilizer through its publicly-traded subsidiary, Rentech Nitrogen Partners, L.P. (NYSE: RNF). Please visit www.rentechinc.com and www.rentechnitrogen.com for more information.
Forward Looking Statements
This news release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 about matters such as: pellet demand in Pennsylvania and New York; Allegheny’s expected financial performance, capital investments and production plans. These statements are based on management’s current expectations and actual results may differ materially as a result of various risks and uncertainties. Factors that could cause actual results to differ from those reflected in the forward-looking statements are set forth in Rentech’s press releases and periodic reports filed with the Securities and Exchange Commission, which are available via Rentech’s website at www.rentechinc.com. The forward-looking statements in this news release are made as of the date of this release and Rentech 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.
