Rentech acquire Fulghum Fibres

Rentech to acquire Fulghum Fibres

6:06 AM, 4th May 2013
Rentech to acquire Fulghum Fibres

LOS ANGELES, US: Rentech Inc announced the acquisition of Georgia-based Fulghum Fibres Inc and the acquisition of two facilities for conversion to the production of wood pellets in Ontario, Canada, along with contracts for the sale and transport of more than four million metric tonne of wood pellets over ten years. These steps position Rentech to develop a world class wood processing business for production of high-quality wood chips and pellets. Rentech expects these investments to be funded from cash on hand, expected distributions from Rentech Nitrogen, and investments from a joint venture partner.

The acquisition provides Rentech with immediate stable cash flow with growth opportunities, and a platform to launch into the growing and complementary global wood pellet industry.

“Today’s announcements launch us into the wood fibre and pellet supply business, with immediate cash flow and significant growth opportunities, and allow us to take advantage of our fibre relationship in the Province of Ontario. Fulghum Fibres provides immediate and steady EBITDA and nearly 25 years of fibre processing expertise that we can leverage for successful execution in the wood pellet industry,” said D Hunt Ramsbottom, President and CEO, Rentech.

“We expect these new businesses to have stable cash flows. The pellet facilities are structured around sustainably managed long-term fibre supplies and long-term off-take and logistics contracts. Fulghum Fibres’ chip processing business is primarily a fee-based service. The stability of margins we expect here will reduce our consolidated exposure to agricultural cycles inherent in Rentech Nitrogen’s business. We believe this diversification and pricing stability creates a stronger and more valuable entity at Rentech in the short, medium and long term,” added Ramsbottom.

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