LOS ANGELES--(BUSINESS WIRE)--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.