Rentech Declares Special Cash Dividend of $0.19 per Share Payable in 2012 and Announces Early Redemp
Rentech Declares Special Cash Dividend of $0.19 per Share Payable in 2012 and Announces Early Redemption of Convertible Notes
Company Also Announces Acceleration of Decision Timeline to Implement Alternatives for its Technology Portfolio as Part of Ongoing Review of Strategies to Create Value for Shareholders
LOS ANGELES--(BUSINESS WIRE)-- Rentech, Inc. (NYSE MKT: RTK) today announced that its Board of Directors has taken a series of actions in continuation of its program to optimize its balance sheet and maximize its after-tax returns. Specifically, the Company's directors have:
- Declared a special one-time cash dividend of $0.19 per common share, which represents approximately $42.2 million in payments to holders of outstanding shares, representing a 14.6% yield on the Company's share price at the beginning of this year, and a 6.6% yield based on the closing share price on Friday, December 7, 2012;
- Determined to redeem all of its 4.00% convertible senior notes on December 31, 2012. The notes, with principal amount of $57.5 million, are due to mature on April 15, 2013. The early redemption will result in interest savings of approximately $0.7 million and will be funded from the Company's available cash; and
- Accelerated the decision timeline by which they will choose and implement the highest-value alternative for the Company's technology portfolio, and they now expect to take such actions in the first quarter of 2013.
D. Hunt Ramsbottom, President and CEO of Rentech, said, "These steps, including the special cash dividend and early redemption of our convertible notes, which combined will return more than $100 million to shareholders and convertible note holders, reflect our commitment to find the best uses for our cash on hand and the cash generated by our majority ownership of Rentech Nitrogen Partners, L.P. While we have realized extraordinary gains in value for our shareholders, with a 121% year-to-date appreciation in our stock price and a 230% gain since we announced the IPO of Rentech Nitrogen in early August 2011, we remain committed to reviewing additional steps to enhance shareholder value. The special dividend and early redemption of our convertible notes also reflect our ongoing confidence in the strength of our financial future, and leave us well-positioned to implement our business plans."
The steps announced today come as a result of Rentech's successful execution of its strategy and the Board's ongoing evaluation of the best steps to utilize its capital and create shareholder value. Consistent with that plan, it now expects to make a decision on the best alternative for its technology portfolio in the first quarter of 2013, earlier than its previous timeline of the first half of 2013. Among the alternatives being considered to maximize the value of that business are potential partnerships for the commercialization of its technologies, which the Company would enter into only if such partnerships would be financially attractive and provide near-term cash.
Pro forma for payment of the special cash dividend, redemption of the convertible notes, and the third quarter cash distribution received from Rentech Nitrogen Partners on November 14th, Rentech, Inc.'s unconsolidated cash balance as of September 30, 2012 would have been approximately $103 million. A reconciliation of Rentech, Inc.'s pro forma unconsolidated cash balance to its actual unconsolidated cash balance as of September 30, 2012 is included below in this press release.
The special cash dividend is payable on December 27, 2012 to shareholders of record as of the close of business on December 20, 2012. The special dividend will be funded from the Company's available cash. Rentech expects the majority of the dividend to be either a return of capital or capital gain for shareholders, depending on shareholders' individual basis in their stock. The final tax characterization will be determined in January 2013. The Company advises each shareholder to consult with a tax advisor regarding the tax treatment of this dividend.
In addition to the special cash dividend, Rentech has repurchased approximately 9.1 million shares this year, at an average price of $1.81 per share, for an aggregate purchase price of $16.4 million. Combined with the approximately $42.2 million special dividend, the Company has returned $58.6 million of cash to shareholders this year. Approximately $8.6 million worth of shares can still be repurchased under the existing $25 million share repurchase plan.
The convertible notes to be redeemed, with principal amount of $57.5 million, are due to mature on April 15, 2013 and are convertible into 14,332,002 shares of common stock, subject to certain adjustments. Upon redemption of the notes, Rentech, Inc. will have no material outstanding debt obligations, but those of Rentech Nitrogen Partners, L.P. will continue to appear on the Company's consolidated balance sheets.
Disclosure Regarding Non-GAAP Financial Measures
Management believes that including the Company's pro forma unconsolidated cash balance will provide investors with additional information regarding the Company's liquidity. A reconciliation of the Company's unconsolidated cash balance as of September 30, 2012 to its pro forma cash balance after giving effect to the payment of the special dividend, redemption of convertible debt, and receipt of the cash distribution from Rentech Nitrogen Partners on November 14th is below.
Rentech, Inc.'s Pro Forma Unconsolidated Cash Balance Reconciliation (excludes Rentech Nitrogen Partners' cash balance)
($ in millions)
|September 30, 2012 Actual Unconsolidated Cash Balance||$||183.0|
|Redemption of Convertible Notes (including accrued interest)||(58.0||)|
|Cash Distribution from Rentech Nitrogen on November 14, 2012||19.8|
|Pro Forma September 30, 2012 Unconsolidated Cash Balance||$||102.6|
About Rentech, Inc.
Rentech, Inc. (www.rentechinc.com) owns and develops technologies that enable the production of certified synthetic fuels and renewable power when integrated with certain other third-party technologies. The Company owns the Rentech-SilvaGas and the Rentech-ClearFuels biomass gasification technologies, each of which can produce synthesis gas from biomass or waste materials, for production of renewable power and fuels. The Rentech-ClearFuels gasifier can also produce renewable hydrogen as a product. Rentech also owns the patented Rentech Process, based on Fischer-Tropsch chemistry, which can convert syngas from the Company's own or other gasification technologies into complex hydrocarbons that then can be upgraded into fuels or chemicals using refining technology that we license.
Rentech also owns, through its wholly-owned subsidiaries, the general partner and approximately 60% of the common units representing limited partner interests in Rentech Nitrogen Partners, L.P. (www.rentechnitrogen.com), a limited partnership traded publicly under the symbol RNF. Rentech Nitrogen Partners, L.P. manufactures and sells nitrogen fertilizer products.
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 Company's intention to pay a special one-time dividend; whether a portion of the dividend will be treated as a return of capital; plans to redeem its outstanding convertible notes; confidence in the Company's financial future; whether and the extent to which the Company will realize profitability on its alternative energy business assets; the ability of the Company to grow its business; and the return profile of potential partnerships the Company may enter into. 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.
Julie Dawoodjee Cafarella
Vice President of Investor Relations and Communications
KEYWORDS: United States North America California
The article Rentech Declares Special Cash Dividend of $0.19 per Share Payable in 2012 and Announces Early Redemption of Convertible Notes originally appeared on Fool.com.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.