Rentech Prices Shares and Senior Notes Offerings; Expects $100M in Proceeds

12 April 2006

Rentech, Inc., the developer of a Fischer-Tropsch process for the production of synthetic fuels, has priced concurrent public offerings of 16 million shares of common stock and $50-million (aggregate) in convertible senior notes due 2013.

The company expects net proceeds from the offerings to be approximately $96.4 million—$111.2 million if the underwriters exercise both of their over-allotment options in full. Rentech will use the net proceeds to finance the purchase price of its pending acquisition of the Royster-Clark Nitrogen natural gas-fed nitrogen fertilizer plant in East Dubuque, Illinois (earlier post), to fund working capital at RCN and for general corporate purposes, which may include some of the initial development costs for the conversion of the East Dubuque facility to use coal as feedstock.

The Company will sell the shares of common stock at a public offering price of $3.40 per share. Rentech also has granted the underwriters a 30-day option to purchase up to an additional 2.4 million shares of common stock to cover over-allotments.

Concurrently with its agreement to sell common stock, the Company has agreed to sell $50 million aggregate principal amount of its 4.0% convertible senior notes due 2013. The Company has also granted the underwriters a 30-day option to purchase up to an additional $7.5 million of notes to cover over-allotments.

The notes will be convertible by holders into shares of the Company’s common stock upon the satisfaction of certain conditions at an initial conversion rate of approximately 249.25 shares of common stock per $1,000 principal amount of notes (subject to adjustment in certain circumstances), which represents an initial conversion price of approximately $4.01 per share.

Rentech is also planning to build a new coal-to-liquids (CTL) plant in Adams County, Mississippi by 2010. The estimated cost is between $650 million and $750 million. (Earlier post.) Also, Rentech and DKRW Advanced Fuels have signed a Master License Agreement (MLA) for the use of Rentech’s Fischer-Tropsch coal-to-liquids (CTL) technology. First application will be in DKRW’s planned Medicine Bow, Wyoming CTL plant. (Earlier post.)