Boston, MA 04/10/2014 (wallstreetpr) – Rentech, Inc. (NASDAQ:RTK) may eventually spin off its fibre processing business as a master limited partnership. However, that will require that the company first raises the status of the business to meet IPO requirements; it is doing that already.
The company has long-standing plans for its wood fibre processing business. It discussed many of its plans during the most recent earnings conference call. Among other things, the company stated that it was seeking additional funding to improve its wood fibre processing operations.
Rentech also makes and markets nitrogen fertilizer in addition to its wood fibre processing activities. However, it seems the company is keen on using the funds obtained from Blackstone to improve its wood fibre processing business that it plans to spin off in a later date.
Funding comes
Rentech, Inc. (NASDAQ:RTK) announced that Blackstone will invest as much as $150 million in its business through preferred stock and term loan. The company stated that the investment will allow Blackstone to have two seats in its board of directors.
Shares of Rentech, Inc. (NASDAQ:RTK), a $471 million company, jumped significantly following the positive news.
Rentech announced that the investment from Blackstone will come through GSO Capital Partners LP, which is the credit management division of the company. Investment through acquisition of preferred stock will account for $100 million while investment through term loan will account for $50 million. That brings to total investment from Blackstone to $150 million.
With that investment, Blackstone will nominate to the board of Rentech, Inc. (NASDAQ:RTK) two of its executives namely Patrick Moore of Smurfit-Stone Container Corp and Douglas Ostrover, who is a co-founder of GSO.
Vote of confidence
Rentech, Inc. (NASDAQ:RTK) termed the investment from Blackstone as a vote of confidence in its business. The company’s CEO D. Hurt Ramsbottom observed that they will be able to use the funds from the new institutional investors to finance growth objectives, more so in the wood fibre processing division. Moreover, the executive said that having Blackstone among their institutional investors opens up long-term partnership opportunity for the company.
Blackstone has a proven history of successfully selecting and investing in new and promising opportunities.
Although the current investment arrangement with Blackstone involves $150 million in stock and term loan, Rentech, Inc. (NASDAQ:RTK) said that they hope to benefit more from additional investment, and also access to more financing from the investor.
