By Lisa Kerner
Charlotte, N.C., March 14 – Rentech, Inc. said GSO Capital Partners LP agreed to provide the company with additional short-term liquidity of $6 million if needed prior to the closing of the pending merger between Rentech Nitrogen Partners, LP and CVR Partners, LP.
The new tranche D term loan, if drawn, carries an interest rate of Libor plus 1,400 basis points, with a Libor floor of 1%. It matures at the earlier of closing of the merger and May 31, 2016, according to a news release.
Rentech pledged an additional 3.1 million units it owns in Rentech Nitrogen to secure all GSO loans.
Any CVR units that are not used to repay GSO will remain as collateral for any continuing GSO loan until the loans are repaid in full, the release stated.
GSO also has agreed to revise its existing waiver and amendment agreement to adjust the terms under which Rentech will retire its convertible preferred stock and term loan debt held by GSO and funds it manages or advises.
The agreement eliminates Rentech’s obligation to deliver $10 million of newly issued common shares to GSO at a 15% discount to the 60-day volume-weighted average price two days prior to the closing of the merger. It also reduces the combined amount of convertible preferred stock and term loan debt that Rentech must repay at the closing of the merger with CVR common units to the lesser of the discounted value of the units received and $140 million, from $140 million plus $10 million of common stock.
The modifications enable the CVR merger to close without regard to whether Rentech receives units in CVR sufficient to repay a fixed amount of preferred stock and debt held by GSO.
“We appreciate that GSO was willing to renegotiate the terms of the exchange to eliminate the significant dilution in Rentech common stock had we proceeded with the original terms of the agreement,” Rentech president and chief executive officer Keith Forman said in the news release. “We believe that the increase in our credit facility with GSO provides us with a safety net of liquidity should the merger take longer than expected to close.”
Los Angeles-based Rentech owns and operates wood fiber processing, wood pellet production and nitrogen fertilizer manufacturing businesses.
| Company: | Rentech Inc.
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| Issue: | Tranche D term loan
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| Lender: | GSO Capital Partners LP
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| Amount: | $6 million
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| Interest: | Libor plus 1,400 bps; 1% Libor floor
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| Maturity: | Earlier of the merger closing and May 31, 2016
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