Rentech Revises Agreements with GSO Capital Partners to Improve Liquidity and Reduce Dilution
March 14 2016 - 3:52PM
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20160314006367/en/
Rentech, Inc.Julie Dawoodjee CafarellaVice president of
Investor Relations and Communications310-571-9800ir@rentk.com
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