Rentech’s New England Wood Pellet Acquires Allegheny Pellet
February 23 2015 - 6:00AM
Business Wire
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.
Rentech, Inc.Julie Dawoodjee CafarellaVice president of
Investor Relations and Communications310-571-9800ir@rentk.com
Rentech, Inc. (NASDAQ:RTK)
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