US ferts producer Rentech Nitrogen to acquire Agrifos for $158m

01 November 2012 13:47  [Source: ICIS news]

LONDON (ICIS)--Major US nitrogen fertilizer producer Rentech Nitrogen Partners on Thursday revealed it will pay an initial $158m (€122m) to acquire Agrifos, the country’s third largest producer of ammonium sulphate (AS).

Agrifos owns and operates a plant in Pasadena, Texas, that covers 85 acres of land adjacent to the Houston Ship Channel. The facility produces up to 575,000 tonnes of AS per year, along with 570,000 tonnes of sulphuric acid.

The new owner plans to increase the plant’s AS production capacity by 20% through an imminent debottlenecking project which will boost AS output to approximately 2,100 tonnes/day from the current 1,750 tonnes/day.

The Pasadena facility, which is close to several railway lines, also features solid fertilizer warehouses, an ammonia dock and tank, and product storage facilities and tanks.

In a lengthy statement announcing the deal, Rentech Nitrogen said it expects to complete the acquisition within the next week and added that the Pasadena “facility and site provide a number of opportunities for organic growth in cash flows from the acquisition”.

The deal will also give Rentech Nitrogen – which has a traditional client base in the mid-corn belt – access to customers throughout the US and Brazil. The company plans to complete a cogeneration power project at the plant to reduce energy costs and explore terminalling opportunities for fertilizers and other products.

“We are extremely pleased to announce our first acquisition, one year after Rentech Nitrogen became a public company,” said Rentech Nitrogen CEO, D Ramsbottom. “Agrifos’ business is expected to provide incremental cash flow and diversifies the products, markets, location, and raw materials of our existing natural gas-based nitrogen fertilizer plant in East Dubuque, Illinois.”

John Diesch, president of Rentech Nitrogen, added: “We are confident in our integration plan for this asset and we believe our operating expertise can be applied to the Pasadena site to enhance plant operations and allow us to execute on growth plans at the site.”

Rentech Nitrogen also expects the deal to act as an “ammonia hedge” for its East Dubuque facility as Agrifos purchases ammonia based on Tampa prices, which are lower than the Corn Belt prices at which the Illinois facility sells ammonia. “This should allow the consolidated business to capture the premium between Tampa and corn belt pricing, while reducing the consolidated exposure to the variability in ammonia prices,” the producer explained.

Rentech Nitrogen will pay an initial $138m in cash through an amended credit facility and $20m of common units for Agrifos.

($1 = €0.77)

By: Richard Ewing
+44 208 652 3214

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