Rentech Announces Agreement to Sell Alternative Energy Technology Assets
March 05 2014 - 7:00AM
Business Wire
Exit from Alternative Energy Technologies
Business to be Completed in 2014
Rentech, Inc. (NASDAQ: RTK) today announced that it has entered
into a definitive agreement with Sunshine Kaidi New Energy Group
Co., Ltd. (Kaidi) to sell its alternative energy technologies and
decommissioned Product Demonstration Unit (PDU).
The transaction calls for an initial cash payment to Rentech of
$15.3 million, and the possibility of a success payment of up to
$16.2 million to the Company upon the successful construction and
operation by Kaidi, at its cost, of a demonstration-scale plant in
China utilizing the technologies and PDU equipment acquired from
Rentech. In addition, Rentech and Kaidi will share equally in any
proceeds from the future sale of the PDU site in Commerce City, CO,
net of transaction fees and carrying costs of the property incurred
by Rentech after the closing of the sale of the technologies and
PDU.
The equipment purchased by Kaidi will be relocated to Wuhan,
China where Kaidi is in the process of expanding its
biomass-to-liquids demonstration facility to employ some or all of
Rentech’s alternative energy technologies. Upon Kaidi’s completion
of this demonstration facility, Rentech will be eligible to receive
up to $16.2 million in success payments based on the performance of
the technologies.
“The sale of these technologies and the decommissioned PDU is
the final step in exiting our alternative energy technology-related
operations. We continue to focus on driving near-term and long-term
growth in our wood fibre processing and fertilizer businesses,”
said D. Hunt Ramsbottom, President and CEO of Rentech. “We are
pleased Kaidi has agreed to purchase these assets with plans to
demonstrate and commercialize them in alternative energy projects
abroad, as the energy landscape and lack of government support no
longer make their deployment economic in the U.S. in the
foreseeable future. We are grateful to all of our employees who
helped develop such innovative and effective technologies.”
In 2013, Rentech ceased operations at the PDU and successfully
mothballed the facility. Staffing in the Company’s alternative
energy business was also significantly reduced and all related
research and development activities were eliminated. Upon closing
of the sale of the technologies and the decommissioned PDU, Kaidi
will assume substantially all costs associated with Rentech’s
alternative energy technology business. Rentech anticipates total
costs associated with the energy technology business, including
costs to secure the sale agreement and close the transaction,
site-related carrying costs, and transitional costs, to be
approximately $5 million in 2014, which will be recorded as
selling, general and administrative expenses. Rentech expects to
sell the PDU site by the end of the first quarter of 2015.
The sale of the technologies is expected to close in mid-2014.
Closing of the transaction is subject to customary conditions,
including regulatory approvals in the United States and the
People’s Republic of China.
About Rentech, Inc.
Rentech, Inc. (www.rentechinc.com) owns and operates wood fibre
processing and nitrogen fertilizer manufacturing businesses. The
wood fibre processing business consists of the provision of wood
chipping services and the manufacture and sale of wood chips,
through a wholly-owned subsidiary, Fulghum Fibres, Inc., and the
development of wood pellet production facilities. Rentech’s
nitrogen fertilizer business consists of the manufacture and sale
of nitrogen fertilizer through its publicly-traded subsidiary,
Rentech Nitrogen Partners, L.P. (NYSE: RNF).
Safe Harbor Statement
This press release contains forward-looking statements as
defined in the Private Securities Litigation Reform Act of 1995
about matters such as the sale of the Company’s alternative energy
technologies and PDU; and the expected closing date for the
transactions and the expected alternative energy costs in 2014.
These statements are based on management’s current expectations and
actual results may differ materially as a result of various risks
and uncertainties. Other factors that could cause actual results to
differ from those reflected in the forward-looking statements are
set forth in the Company’s prior press releases and periodic public
filings with the Securities and Exchange Commission, which are
available via Rentech’s website at www.rentechinc.com. The forward-looking statements
in this press release are made as of the date of this press 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.
Rentech, Inc.Julie Dawoodjee CafarellaVice President of
Investor Relations and Communications310-571-9800ir@rentk.com
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