CVR Partners To Acquire Rentech Nitrogen For Total Enterprise Value Of $839 Mln

(RTTNews) - CVR Partners, LP (UAN) and Rentech Nitrogen Partners, L.P. (RNF) announced the execution of a definitive merger agreement under which CVR Partners will acquire all outstanding units of Rentech Nitrogen.

The combination excludes Rentech Nitrogen's Pasadena facility, which will be retained by current holders of Rentech Nitrogen, or sold separately for their benefit.

Total consideration for Rentech Nitrogen excluding the Pasadena facility is $533 million, implying a total enterprise value of approximately $839 million, based on closing prices on August 7, 2015.

As per the terms of the transaction, each outstanding common unit of Rentech Nitrogen will be exchanged for 1.04 units of CVR Partners and $2.57 of cash. The value of the CVR Partners units plus the cash consideration, which excludes the value of the Pasadena facility, represents a 20.3% premium to the unit value implied from the unaffected exchange ratio on February 16, 2015, one day before Rentech Nitrogen announced its process to explore strategic alternatives.

Upon closing of the transaction, Rentech Nitrogen's unitholders (including Rentech, Inc.) will own approximately 40.5 million units, or 35.6%, of the combined partnership. As part of the transaction, CVR Partners will assume or refinance Rentech Nitrogen's net debt, which was approximately $307 million as of March 31, 2015.

CVR Partners expects this transaction to be double-digit accretive to distributable cash per unit before synergies.

Upon closing, the Board of Directors of the general partner of CVR Partners will increase from seven to 11 directors, including two newly appointed designees of CVR Energy, Inc. and two newly appointed designees of Rentech, Inc. Jack Lipinski, executive chairman of CVR Partners, will serve as executive chairman of the combined partnership that will operate under the name CVR Partners. Mark Pytosh, chief executive officer of CVR Partners, will serve as chief executive officer.

Existing unitholders of CVR Partners will own approximately 64.4% of the combined entity; CVR Energy, Inc., the owner of the general partner of CVR Partners, will own approximately 34.1%.

Rentech Nitrogen's unitholders will initially own approximately 35.6% of the combined entity. Rentech, Inc., the current owner of approximately 59.7% of Rentech Nitrogen's common units, will initially own approximately 21.3% of the combined entity.

In conjunction with the closing of the merger, Rentech will exchange a portion of the CVR Partners units it receives for $140 million of debt and convertible preferred securities owned by GSO Capital Partners, at a unit price to be determined based on a 15% discount from average closing prices in the period just before closing of the merger.

Completion of the merger, assuming the requisite unitholder vote is obtained, and subject to the terms and conditions outlined in the merger agreement, is expected to occur by the end of 2015 and no later than May 31, 2016.