Daily News: March 15, 2016

GSO Capital Provides $6MM to Support Rentech Merger

GSO Capital Partners (GSO) agreed to provide Rentech with additional short-term liquidity of $6 million, if required, prior to the closing of the pending merger between Rentech Nitrogen Partners and CVR Partners.

GSO also agreed to revise its existing waiver and amendment agreement to adjust the terms pursuant to which the company will retire its convertible preferred stock and term loan debt held by GSO and funds managed or advised by it.

According to the agreement, GSO will:

  • Provide Rentech with a new $6 million term loan in the event the company needs additional liquidity prior to the earlier of the merger closing or May 31, 2016, the outside maturity date of the new term loan.
  • Eliminate 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.
  • Reduce 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 from $140 million (plus $10 million of common stock) to the lesser of the discounted value of the units received and $140 million.

Rentech and GSO amended the terms of the existing credit facility to provide for a $6 million commitment for a new tranche D term loan. The new tranche D term loan if drawn carries an interest rate of LIBOR plus 14%, with a LIBOR floor of 1% and matures at the earlier of closing of the merger and May 31, 2016. Under this new amendment, 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 amended agreement with GSO also includes a new event of default on all borrowings should the merger with CVR not close by the outside date due to a breach of the merger agreement by Rentech Nitrogen, which has become April 30, 2016 now that Rentech Nitrogen has closed the sale of the Pasadena facility.

The modifications to the waiver are intended to 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,” said Keith Forman, president and CEO of Rentech.