Rentech Revises Agreements with GSO Capital Partners to Improve Liquidity and Reduce Dilution

March 14, 2016

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LOS ANGELES–(BUSINESS WIRE)–Rentech, Inc. (NASDAQ: RTK) announced today that GSO Capital Partners LP (GSO) has agreed to provide Rentech with additional short-term liquidity of $6 million if required prior to the closing of the pending merger between Rentech Nitrogen Partners, L.P. (Rentech Nitrogen) and CVR Partners, LP (CVR). GSO has also agreed to revise its existing waiver and amendment agreement to adjust the terms pursuant to which the company will retire its convertible preferred stock and term loan debt held by GSO and funds managed or advised by it.

The agreements announced today:

  • provide Rentech with a new $6 million term loan in the event the company needs additional liquidity prior to the earlier of the merger closing or May 31, 2016, the outside maturity date of the new term loan;
  • eliminate Rentech’s obligation to deliver $10 million of newly-issued common shares to GSO at a 15% discount to the 60-day volume weighted average price two days prior to the closing of the merger; and
  • reduce the combined amount of convertible preferred stock and term loan debt that Rentech must repay at the closing of the merger with CVR common units from $140 million (plus $10 million of common stock) to the lesser of the discounted value of the units received and $140 million.

The modifications to the waiver are intended to enable the CVR merger to close without regard to whether Rentech receives units in CVR sufficient to repay a fixed amount of preferred stock and debt held by GSO. As a result of the modifications to the waiver, Rentech will be required to deliver the lesser of the value of units it receives and $140 million, and any unpaid amount would remain as debt outstanding or become debt in the case of preferred stock. However, in connection with the waiver modifications, GSO and Rentech have agreed to a provision to use commercially reasonable efforts to discuss in good faith further possible amendments to the terms of the GSO exchange.

“We appreciate that GSO was willing to renegotiate the terms of the exchange to eliminate the significant dilution in Rentech common stock had we proceeded with the original terms of the agreement,” said Keith Forman, President and CEO of Rentech. Mr. Forman added, “We believe that the increase in our credit facility with GSO provides us with a safety net of liquidity should the merger take longer than expected to close.”

Rentech and GSO amended the terms of the existing credit facility to provide for a $6 million commitment for a new Tranche D term loan. The new Tranche D term loan if drawn carries an interest rate of LIBOR plus 14%, with a LIBOR floor of 1% and matures at the earlier of closing of the merger and May 31, 2016. Under this new amendment, Rentech pledged an additional 3.1 million units it owns in Rentech Nitrogen to secure all GSO loans. Any CVR units that are not used to repay GSO will remain as collateral for any continuing GSO loan until the loans are repaid in full. The amended agreement with GSO also includes a new event of default on all borrowings should the merger with CVR not close by the outside date due to a breach of the merger agreement by Rentech Nitrogen, which has become April 30, 2016 now that Rentech Nitrogen has closed the sale of the Pasadena facility.

Additional details about the terms of the agreements with GSO will be provided in a Form 8-K that Rentech will file with the Securities and Exchange Commission.

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 our forecasts for liquidity. 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.

Category: Oil & Gas