Boston, MA 05/06/2014 (wallstreetpr) – Rentech, Inc. (NASDAQ:RTK) that produces wood fibre and nitrogen fertilizer, announced that a division of Blackstone would be investing $150 million in the exchange for two of its members being included in the board of directors of Rentech.
This was mainly being done to settle a long-standing dispute about the company’s plans to raise capital. The beneficiaries would include Engaged Capital LLC and Lone Star Value Management LLC. This announcement was very well received by the street, pushing the shares up by 19% on aggressive buying.
Settlement of the Dispute
The main bone of contention was that according a certain section of Rentech’s shareholders, the company was inept in managing its funds effectively, especially in the areas of allocating and spending the money it had raised.
The newly infused directors would form a five member finance committee and would play a major role in understanding the company’s spending habits and importantly its pay scales to the executives of the company.
Proposed Use of the Funds Raised
With the induction of the$150 million from the Blackstone arms, Rentech, Inc. (NASDAQ:RTK) announced that this money would be used to increase the capacity of its wood fibre manufacturing business. To a level from where the company could contemplate making a public offering raise some more funds that would stand them in good stead in the future.
Blackrock’s Method of Investing
One of its divisions, namely, GSO Capital Partners LP, would bring in $100 million, and the rest would come from offering convertible preferred shares, along with $50 million as a term loan. At the prevailing market value, the value of the company would be close to $412 million as per the last closing price at the stock exchanges.
This investment by Blackrock would reinforce the belief of investors in the strong business prospects of Rentech.
The new members on the board of Rentech, Inc. (NASDAQ:RTK) would include the nominees of Blackrock, namely, Douglas Ostrover, former founder of GSO Capital Partners LP and Patrick Moore, former head of Smurfit Stone Container Corp.
