NEWP, established in 1992, operates three wood pellet facilities with a combined annual production capacity of 240,000 tons. The facilities are strategically located in the U.S. Northeast, which is the largest domestic market for consumption of wood pellets for heating. NEWP generated EBITDA of approximately $7.4 million in 2013.
“NEWP is the leader in the growing U.S. market for wood pellets used in heating applications. The acquisition brings additional cash flows and profitability to our wood fibre business. In addition, NEWP’s business broadens our product offerings, customer base and geographic markets,” said D. Hunt Ramsbottom, president and CEO of Rentech.
Rentech acquired all of the equity interests of NEWP for $34.5 million in cash, funded from proceeds of Blackstone/GSO’s recent $150 million investment in Rentech. Rentech will assume NEWP’s cash of $2.4 million and debt of approximately $13 million, for a total initial purchase price of $45.1 million. The initial acquisition price equals 6.1 times NEWP’s 2013 EBITDA. Rentech expects an after-tax return on the acquisition in the mid-teens.
Rentech, Inc. owns and operates wood fibre processing, wood pellet production and nitrogen fertilizer manufacturing businesses.