ITEM 2.03
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CREATION OF A DIRECT FINANCIAL OBLIGATION.
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On November 1, 2012, in connection with the Partnerships acquisition of Agrifos, the Partnership entered into a $300,000,000 credit agreement (the Credit Agreement) by and among
Rentech Nitrogen, LLC (RNLLC), a wholly owned subsidiary of the Partnership, Agrifos and certain other subsidiaries of Agrifos, as borrowers (the Borrowers), the Partnership, as guarantor, General Electric Capital
Corporation, as administrative agent and swingline lender, GE Capital Markets, Inc. as sole lead arranger and bookrunner, BMO Harris Bank, N.A., as syndication agent, and the lenders party thereto. A copy of the Credit Agreement is filed hereto as
Exhibit 10.1 and is incorporated herein by reference.
The Credit Agreement amends and restates in its entirety the existing
$135,000,000 Credit Agreement, originally entered into on February 28, 2012 among RNLLC, as borrower, the Partnership, as guarantor, General Electric Capital Corporation, as administrative agent, GE Capital Markets, Inc. as sole lead arranger
and bookrunner, BMO Harris Bank, N.A. as syndication agent and the lenders party thereto.
The Credit Agreement consists of
(i) a $155,000,000 term loan facility used to fund the cash purchase price of the Acquisition (the Term Loan Facility), (ii) a $110 million multiple draw term loan (the Capital Expenditures Facility) of which
(a) $100 million can be used to finance capital expenditures related to an ammonia production and storage capacity expansion project at the Partnerships facility in East Dubuque, Illinois and (b) $10 million can be used to finance
capital expenditures related to the Pasadena Facility and (iii) a $35 million revolving facility that can be used for seasonal working capital needs, letters of credit and for general corporate purposes (the Working Capital
Facility).
The Credit Agreement has a maturity date of October 31, 2017. Borrowings under the Credit Agreement
bear interest at a rate equal to an applicable margin plus, at the Borrowers option, either (a) in the case of base rate borrowings, a rate equal to the highest of (1) the prime rate, (2) the federal funds rate plus 0.5% or
(3) LIBOR for an interest period of three months plus 1.00% or (b) in the case of LIBOR borrowings, the offered rate per annum for deposits of dollars for the applicable interest period on the day that is two business days prior to the
first day of such interest period. The applicable margin for borrowings under the Credit Agreement will be 2.75% with respect to base rate borrowings and 3.75% with respect to LIBOR borrowings. Additionally, the Borrowers are required to pay a fee
to the lenders under the Capital Expenditures Facility on the undrawn portion available at a rate of 0.75% per annum and a fee to the lenders under the Working Capital Facility on the undrawn portion available at a rate of 0.50% per annum.
The Borrowers are also required to pay customary letter of credit fees on issued letters of credit.
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The Working Capital Facility includes a letter of credit sublimit of up to $10 million and
it can be drawn on or letters of credit can be issued through the day that is seven days prior to the maturity date. The amounts outstanding under the Working Capital Facility will be required to be reduced to zero (other than outstanding letters of
credit) for three ten consecutive business day periods during each year with each period not less than four months apart, and one period to begin each April.
The Term Loan Facility matures on October 31, 2017, and requires quarterly amortization payments of $1,937,500 on the first day of each fiscal quarter commencing with the fiscal quarter beginning
January 1, 2013, with the final principal payment in the amount of the remaining outstanding principal balance due upon maturity.
The Capital Expenditures Facility can be drawn until February 28, 2014 and requires quarterly amortization payments expected to begin in spring of 2014. In the first two years of amortization, the
Borrowers must make amortization payments of 10% per year, or 2.5% per quarter of the principal outstanding on the Capital Expenditures Facility, and thereafter, 25% per year, or 6.25% per quarter must be repaid, with the final
principal payment due upon maturity.
Borrowings under the Credit Agreement will be subject to mandatory prepayment under
certain circumstances, with customary exceptions, from the proceeds of permitted dispositions of assets and from certain insurance and condemnation proceeds.
All obligations of the Borrowers under the Credit Agreement are unconditionally guaranteed by the Partnership. All obligations under the Credit Agreement and the guarantees of those obligations are
secured by substantially all of the Borrowers assets, as well as substantially all the assets of the Partnership (including its equity interest in RNLLC and Agrifos).
The Credit Agreement also contains customary representations and warranties, affirmative and negative covenants and events of default relating to the Partnership and the Borrowers and their respective
subsidiaries. The covenants and events of default include, among other things, compliance with environmental laws, limitations on the incurrence of indebtedness and liens, the making of investments, the sale of assets and the making of restricted
payments. The Credit Agreement also contains specific provisions limiting Rentech Nitrogen Holdings, Inc., the sole member of the General Partner (as defined below), from engaging in certain business activities and owning certain property, and
events of default.
This Current Report on Form 8-K contains only a summary of certain provisions of the Credit Agreement. The
summary does not purport to be a complete summary of the Credit Agreement and is qualified in its entirety by reference to the agreement, which is filed hereto as Exhibit 10.1.
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