GSO Investment to fund near-term growth
opportunities in wood fibre processing business
Settlement with Concerned Rentech
Shareholders includes board representation and a newly formed
board-level Finance Committee that will approve capital
expenditures and review Rentech’s cost structure and executive
compensation
- Funds investments to execute strategy
for wood fibre business, and repays and terminates margin loan
facility
- Rentech to add three new directors who
bring shareholder representation and expertise in capital
allocation and wood fibre
Rentech, Inc. (NASDAQ: RTK) today announced that GSO Capital
Partners LP (GSO), the credit investment arm of Blackstone, will
invest $150 million in Rentech in the form of $100 million of
convertible preferred stock and a $50 million term loan. The
transactions closed on April 9, 2014. In connection with this
investment, Blackstone/GSO appointed two members to Rentech’s Board
of Directors: Douglas Ostrover, a senior managing director of
Blackstone and co-founder of GSO Capital Partners, and Patrick
Moore, the former chairman and chief executive officer of
Smurfit-Stone Container Corporation, a paper-based packaging
company with significant wood fibre operations. Rentech also
announced a settlement with Concerned Rentech Shareholders (CRS),
whereby CRS will approve an additional member to join Rentech’s
Board of Directors and the board’s newly formed Finance Committee.
A slide presentation regarding today's announcements appears on
Rentech’s website, www.rentechinc.com.
Blackstone/GSO
Investment
Proceeds from Blackstone/GSO’s investment will fund identified
growth opportunities in Rentech’s wood fibre processing business.
These opportunities are part of Rentech’s long-standing strategic
plan for the wood fibre processing business. This plan was
discussed most recently during the Company’s fourth quarter
earnings conference call on March 11, 2014. Successfully executing
these growth opportunities is designed to give Rentech’s wood fibre
processing business the scale necessary for a possible initial
public offering as a master limited partnership. Rentech used
proceeds from the convertible preferred stock to repay the $50
million balance on its revolving margin loan. That facility has now
been terminated, and the units of Rentech Nitrogen Partners, L.P.
(Rentech Nitrogen) that served as collateral have been
released.
“This investment by Blackstone’s GSO underscores the strength of
our wood fibre business strategy. The investment is a vote of
confidence in both our fibre and fertilizer businesses by a leading
global investor,” said D. Hunt Ramsbottom, president and chief
executive officer of Rentech. “In addition to funding our immediate
growth plans, Blackstone/GSO’s investment gives Rentech a long-term
partner with a proven track record in successfully evaluating and
investing in new opportunities. Blackstone/GSO can also provide
additional capital and access to investment opportunities as we
continue to explore opportunities in our fibre and nitrogen
businesses. We look forward to working with the Blackstone/GSO
team.”
“Rentech owns and operates world-class assets in wood fibre
processing and nitrogen fertilizer production,” said Douglas
Ostrover, senior managing director of Blackstone and co-founder of
GSO. “We have been in conversations with Rentech for nearly two
years and have thoroughly evaluated Rentech’s businesses, assets,
and management team. We see great potential to create value for
Rentech’s shareholders. We look forward to working as a partner
with the Company to execute the plans they have, and to explore
additional opportunities in the future.”
Summary of Key Terms
$100 Million Convertible Preferred Stock:
- Conversion price of $2.22, which
represents a 23% premium over the closing price of Rentech’s common
stock on April 9, 2014;
- Convertible into approximately 45
million shares of Rentech common stock, representing approximately
16.5% of common shares on an as-if-converted basis;
- 4.5% preferred dividend per annum;
- Optionally redeemable in 7 years;
- The Company may force conversion after
a date which is two years from issuance if the price of Rentech’s
common stock remains above $4.44 for 30 consecutive trading
days;
- Approximately 5.5 million common units
of Rentech Nitrogen, owned by Rentech, backstop the redemption
value. The number of Rentech Nitrogen common units is fixed, with
no covenants related to Rentech Nitrogen’s unit price. The units
will be released if the price of Rentech’s common stock is above
$4.44 for 90 consecutive trading days, if cash is substituted for
the units, or if the preferred shares are converted. Rentech will
continue to receive cash distributions paid on the units;
- Issued at 98% of redemption value;
- Two Blackstone/GSO representatives
appointed to Rentech’s Board of Directors (proportional with
ownership); and
- No hedging transactions by
Blackstone/GSO are permitted unless Rentech’s common stock price is
at least $4.44; No short selling is permitted at any time.
$50 Million Senior Term Loan:
- Interest rate of LIBOR plus 700 basis
points per annum, with a LIBOR floor of 1.00%;
- The sole collateral for the loan will
be approximately 2.8 million common units of Rentech Nitrogen,
owned by Rentech. The number of Rentech Nitrogen common units
provided as collateral is fixed, with no covenants related to
Rentech Nitrogen’s unit price; cash may be substituted at Rentech’s
option. Rentech will continue to receive cash distributions paid on
the units;
- Prepayable without penalty after the
first year or at any time, from proceeds of an IPO of the wood
fibre processing business or certain asset sales;
- Matures five years after closing;
- Issued at 98% of principal; and
- Expandable upon agreement of the
parties, with an accordion feature to increase the term loan by $75
million.
Board of Directors
Rentech also announced changes to its Board of Directors
today:
- Douglas Ostrover, senior managing
director of Blackstone and co-founder of GSO Capital Partners, has
joined the board. Mr. Ostrover brings shareholder representation
and significant finance experience. He has personally overseen
GSO’s deployment of $65 billion of capital. Mr. Ostrover will be
the chairman of the board’s Finance Committee.
- Blackstone/GSO appointed Patrick J.
Moore, former chairman and chief executive officer of Smurfit-Stone
Container Corporation, to the board. Mr. Moore brings 24 years of
expertise in the packaging and wood fibre industries as well as
significant experience in finance.
- Chairman Emeritus Dennis L. Yakobson
has retired from the board, following thirty-one years of service,
including the founding of Rentech.
- Michael Ray has resigned from the
Rentech board. Mr. Ray will continue to serve as a member of the
board of Rentech Nitrogen Partners, L.P.
"We are thrilled to be adding new expertise and fresh
perspectives from two leading figures in their fields," said
Halbert S. Washburn, Chairman of Rentech’s Board of Directors. "On
behalf of the full board, I would like to thank Dennis Yakobson and
Mike Ray for their years of service and many contributions to
Rentech."
Settlement with Concerned Rentech
Shareholders
Rentech entered into a settlement agreement with CRS. As part of
the agreement and in addition to certain standstill restrictions
accepted by CRS:
- An additional director candidate
approved by CRS will be nominated by the Company for election to
its Board of Directors at the 2014 annual meeting of shareholders,
or appointed to the Board of Directors shortly thereafter. In order
to facilitate the election of the additional director candidate,
Rentech will place a proposal on the ballot for the 2014 annual
meeting of shareholders to expand the Board of Directors by one
director;
- The formation of a Finance Committee
consisting of five members including Messrs. Ostrover and Moore and
the additional director candidate approved by CRS. The Finance
Committee will be responsible for approving significant capital
expenditures, reviewing and taking action to reduce Rentech’s cost
structure, and reviewing the Company’s executive compensation
practices;
- CRS will withdraw its slate of nominees
for the 2014 annual meeting of shareholders;
- CRS will vote all of its shares in
favor of the board’s slate of director nominees at the 2014 annual
meeting of shareholders; and
- CRS will withdraw its preliminary proxy
solicitation to call a special meeting of shareholders.
“We are pleased with the addition of three new independent
directors, all of whom will bring an enhanced focus on creating
shareholder value while mitigating risk. These new directors, who
will make up the majority of the newly established Finance
Committee, have our full support as they conduct a thorough review
of the Company’s cost structure, executive compensation practices,
and capital allocation strategy. Further, we believe Blackstone’s
operational depth and experience in building profitable businesses
with strong execution capabilities will significantly enhance the
chances for a successful launch and subsequent IPO of the Company’s
wood fibre opportunity. We look forward to working with the two new
directors from Blackstone and a newly elected director to create
value for all shareholders.”
The agreement will be filed with the Securities and Exchange
Commission as an Exhibit to a Current Report on Form 8-K.
About Douglas Ostrover
Mr. Ostrover is senior managing director of Blackstone and a
founder of GSO Capital Partners. Prior to co-founding GSO Capital
in 2005, Mr. Ostrover held various positions at Credit Suisse First
Boston (CSFB). He served as managing director and chairman of the
Leveraged Finance Group, and global co-head of the Leveraged
Finance Group. Prior to joining CSFB, Mr. Ostrover was managing
director in charge of high yield and distressed sales, trading and
research at Donaldson, Lufkin & Jenrette. Mr. Ostrover is
currently on the Board of Directors of the Michael J. Fox
Foundation. Mr. Ostrover received a Bachelor of Arts in economics
from the University of Pennsylvania and an MBA from the Stern
School of Business of New York University.
About Patrick J. Moore
Mr. Moore serves as president and chief executive officer of PJM
Advisors, LLC, an investment and advisory firm. From 2002 until
2011, Mr. Moore was chairman and chief executive officer of
Smurfit-Stone Container Corporation (formerly Jefferson Smurfit
Corporation), a producer of containerboard and corrugated packaging
and one of the world’s largest paper recyclers. His 24-year tenure
at Smurfit also included service as chief financial officer, vice
president and general manager of the company’s Industrial Packaging
division, and treasurer. Earlier in his career, Mr. Moore held
positions in corporate lending, international banking and corporate
administration at Continental Bank in Chicago. Mr. Moore serves on
the Board of Directors for Archer Daniels Midland Company, a global
food processing and commodities trading company, and Exelis Inc., a
global aerospace, defense, information and services company. Mr.
Moore also serves on the North American Review Board of American
Air Liquide Holdings, Inc. and on the boards of the Metropolitan
YMCA of St. Louis, Boys Hope/Girls Hope, St. Louis Zoological
Society and the Big Shoulders Fund. Mr. Moore received a Bachelor
of Science in business administration from DePaul University.
Advisors
Latham & Watkins LLP and Holland & Hart LLP acted as
legal counsel to Rentech, and Credit Suisse Securities (USA) LLC
acted as financial advisor.
Vinson & Elkins LLP, Moelis & Company, Alvarez &
Marsal Private Equity Services, and Nexus PMG, acted as advisors to
Blackstone.
About Rentech, Inc.
Rentech, Inc. (www.rentechinc.com) owns and operates wood fibre
processing and nitrogen fertilizer manufacturing businesses. The
wood fibre processing business provides wood chipping services,
operations, marketing and trading services, and vessel loading
through a wholly-owned subsidiary, Fulghum Fibres, Inc. Rentech is
also developing wood pellet production facilities. Rentech also
manufactures and sells nitrogen fertilizer through its
publicly-traded subsidiary, Rentech Nitrogen Partners, L.P.
(RNF).
About GSO Capital Partners LP
Blackstone is one of the world’s leading investment and advisory
firms. Blackstone seeks to create positive economic impact and
long-term value for its investors, the companies it invests in, the
companies it advises and the broader global economy. The firm does
this through the commitment of its extraordinary people and
flexible capital. GSO Capital Partners LP is the global credit
platform of Blackstone. GSO, together with its affiliates, has
approximately $65 billion of assets currently under
management and is one of the largest credit-focused alternative
asset managers in the world and a major participant in the
leveraged finance marketplace. GSO seeks to generate superior
risk-adjusted returns in its credit business by investing in a
broad array of strategies including mezzanine, distressed
investing, leveraged loans and other special situation strategies.
Blackstone’s alternative asset management businesses include
investment vehicles focused on private equity, hedge fund
solutions, secondary funds, and multi asset class exposures falling
outside of other funds’ mandates. Blackstone also provides various
financial advisory services, including mergers and acquisitions
advisory, restructuring and reorganization advisory and fund
placement services. Further information is available
at www.blackstone.com. Follow Blackstone on Twitter
@Blackstone.
About Concerned Rentech Shareholders
Concerned Rentech Shareholders, a group led by Engaged Capital,
LLC and Lone Star Value Management, LLC, are together one of the
largest stockholders of Rentech, Inc. with aggregate ownership of
approximately 4.7% of the outstanding shares of RTK.
Engaged Capital, LLC is a limited liability company owned by its
principals and formed to create long-term shareholder value by
bringing an owner’s perspective to the managements and boards of
under-valued public companies. Engaged Capital manages both a
long-only and long/short North American equity fund. Engaged
Capital’s efforts and resources are dedicated to a single
investment style, “Constructive Activism” with a focus on
delivering superior, long-term, risk-adjusted returns for
investors. Engaged Capital is based in Newport Beach, California.
Further information is available at www.engagedcapital.com
Lone Star Value Management, LLC is an investment firm that
invests in undervalued securities and engages with its portfolio
companies in a constructive way to help maximize value for all
shareholders. Lone Star Value was founded by Jeff Eberwein who was
formerly a Portfolio Manager at Soros Fund Management and Viking
Global Investors. Lone Star Value is based in Old Greenwich, CT.
Further information is available at http://lonestarvm.com
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: the Company’s wood fibre processing business
opportunities; its plans to take its wood fibre processing business
public as a master limited partnership; and potential sources of
additional capital. 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.
References to an initial public offering of Rentech’s wood fibre
business in this news release are being made solely to advise
Rentech’s investors regarding the company’s current business plan.
This release does not constitute an offer to sell or a solicitation
of an offer to buy any securities. Any such offer or solicitation
will be made only by means of a prospectus.
Additional Information and Where You Can Find It
Rentech, its directors and certain of its executive officers may
be deemed to be participants in the solicitation of proxies from
shareholders in connection with its annual meeting of shareholders
to be held in 2014 (the “2014 Annual Meeting”). Rentech plans to
file a proxy statement and white proxy card with the SEC in
connection with the solicitation of proxies for the 2014 Annual
Meeting (the “2014 Proxy Statement”). Additional information
regarding the identity of these potential participants and their
direct or indirect interests, by security holdings or otherwise,
will be set forth in the 2014 Proxy Statement and other materials
to be filed with the SEC in connection with the 2014 Meeting. This
information can also be found in Rentech’s definitive proxy
statement for its annual meeting of shareholders held in 2013,
filed with the SEC on April 30, 2013 (the “2013 Proxy Statement”).
To the extent holdings of Rentech’s common stock have changed since
the amounts printed in the 2013 Proxy Statement, such changes have
been or will be reflected on Statements of Change in Ownership on
Form 4 filed with the SEC.
SHAREHOLDERS ARE URGED TO READ THE 2014 PROXY STATEMENT AND
WHITE PROXY CARD (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO),
2013 PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS THAT RENTECH
HAS FILED OR WILL FILE WITH THE SEC BECAUSE THEY CONTAIN IMPORTANT
INFORMATION.
Shareholders will be able to obtain, free of charge, copies of
the 2014 Proxy Statement (when available), 2013 Proxy Statement and
any other documents filed or to be filed by Rentech with the SEC in
connection with the 2013 Meeting at the SEC’s website
(http://www.sec.gov).
Investors:Rentech, Inc.Julie Dawoodjee CafarellaVice President
of Investor Relations and
Communications310-571-9800ir@rentk.comorMacKenzie Partners,
Inc.Mark Harnett1-800-322-2885orMedia:Sard Verbinnen & CoJohn
Christiansen/Megan Bouchier415-618-8750
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