Rentech purchased Rentech Energy Midwest Corporation (REMC), an ammonia nitrogen fertilizer facility, in East Dubuque, Illinois, in April 2006, with plans to improve the economics of the facility by converting the feedstock from natural gas to coal using gasification technology and then using the excess capacity in those gasifiers to run a commercial scale Rentech reactor.

The plan to build Rentech’s first commercial scale reactor at Natchez instead is being driven by several factors including: the uncertainty surrounding proposed greenhouse gas legislation which could increase operating costs at REMC post-conversion; strong pricing and demand for fertilizer products at REMC; and recent changes in the relative economics for coal gasification versus natural gas feedstock at REMC as a result of stabilized natural gas prices and rising construction costs.

The move to Natchez will enable the Company to build and operate a full commercial scale reactor at a lower overall capital cost than the proposed REMC conversion, to lower emissions of carbon dioxide through carbon capture and sequestration, and to achieve design, cost and efficiency improvements in the overall Natchez project.

The Natchez facility will now be built in two phases. Rentech is targeting to complete Phase 1, the production of 1,600 barrels per day, in 2011 or earlier. Its preliminary estimate is that Phase 1 will cost less than half the cost of the previously announced plan to convert the REMC facility. Rentech is targeting to produce an additional 28,000 barrels per day during Phase 2 of the Natchez project.

Using the patented Rentech Process, Natchez Phase 1 will be designed to use coal or petroleum coke together with at least 5% (as measured by energy content) of biomass as the gasification feedstock. In addition, the captured carbon dioxide that will be produced at this facility is designated to be sold under an existing long-term agreement with Denbury Resources for enhanced oil recovery in the region.

With the carbon capture and sequestration plan as well as a biomass blend, Rentech expects the carbon dioxide emissions from the production of fuels at Natchez Phase 1 to be “substantially lower” than those generated in the production of petroleum-derived fuels.

Rentech will continue to pursue its permitting efforts at REMC. Receipt of the permits is one of the factors that will enable the Company to move forward with the REMC conversion in the event that market and public policy factors change, such as construction of the Midwestern Governors Association’s proposed carbon dioxide pipeline.

Rentech also plans to continue pursuing grants from the Federal Government and State of Illinois for a proposed biomass energy technology center at REMC. The proposed center would focus on the development and production of advanced biofuels and/or bio-fertilizer and is expected to include the installation of biomass gasification technologies at the REMC site.

As a result of the shift to the Natchez site, Rentech expects to incur a non-cash charge of approximately $30 million, which is net of payments received from third parties of approximately $10 million, in the fourth quarter of fiscal year 2007 related to costs of the REMC conversion through fiscal year 2007. Rentech also expects to incur additional costs related to the REMC conversion of approximately $8 million in the first quarter of fiscal year 2008.