Rentech Nitrogen Partners, L.P. announced that it has completed its acquisition of Agrifos LLC, the leading producer of synthetic granulated ammonium sulfate fertilizer in North America. The business will become a subsidiary of Rentech Nitrogen and is expected to generate approximately $20 million in operating income and approximately $25 million in EBITDA in 2013, excluding one-time integration and transition costs. The transaction is expected to have an immaterial impact on Rentech Nitrogen's per unit cash distribution for the fourth quarter of 2012.
"We are excited to bring this strategic facility into Rentech Nitrogen's portfolio of assets. We expect its integration to proceed quickly and smoothly and we intend to initiate our first planned organic growth project at the Pasadena plant shortly," said D. Hunt Ramsbottom, CEO of Rentech Nitrogen GP, LLC. "The Pasadena plant's assets are a tremendous fit with our existing business platform, adding to our cash flow per unit and diversifying our business."
The initial purchase price of the acquisition was $158 million with $138 million of the initial purchase price provided in cash. The remainder of the purchase price is provided in the form of common units valued at $20 million based on the 30-day volume-weighted average price of the common units prior to signing the acquisition agreement. Rentech Nitrogen also amended its existing debt facility and expanded its borrowing base from $135 million to $300 million. The amended facility includes an accordion feature to expand the debt capacity by $35 million, subject to new lending commitments, to finance future growth projects.
Dan Cohrs, CFO of Rentech Nitrogen GP, LLC, stated, "These expanded credit facilities give us flexibility to fund our capital program, both at East Dubuque and at our new Pasadena facility. We continue to have a $35 million undrawn revolver and a comfortable cash balance. The cost of capital, at LIBOR+375, is significantly lower than issuing new units for the acquisition. The excess proceeds of the term loan and the new $10 million capital expenditures facility help us to fund required capital at the Pasadena plant. We expect the acquisition to increase our cash distributions per unit, even after we make amortization payments that directly benefit the value of the equity."
Rentech Nitrogen was formed by Rentech, Inc. to own, operate, and expand its nitrogen fertilizer business. Rentech Nitrogen's Pasadena facility is the largest producer of synthetic granulated ammonium sulfate fertilizer in North America, with sales in the United States and South America. The Pasadena plant's other products, which are sold domestically, include ammonium thiosulfate fertilizer and sulfuric acid. The plant uses ammonia and sulfur as its primary feedstocks.
For more information, visit www.rentechnitrogen.com
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