U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 14, 1999
RENTECH, INC.
(Exact name of registrant as specified in its charter)
Colorado 0-19260 84-0957421
(State of incorporation) (Commission File Number) (IRS Employer
Identification No.)
1331 17th Street, Suite 720, Denver, Colorado 80202 80202
(Address of principal executive offices) (Zip Code)
(303) 298-8008
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Item 5. Other Materially Important Events.
Rentech has entered into an agreement as of May 14, 1999 with
Republic Finance Corporation of Denver, Colorado, for the two companies
to jointly develop projects for use of Rentech's Fischer-Tropsch
technology. The technology, which is proprietary to Rentech, converts
gases and other materials that contain carbon into higher value
hydrocarbon products. The products include cleaner burning sulfur free
diesel, naphtha which is useful as a chemical feedstock, and specialty
product feedstocks.
Under the agreement, the two companies will each own 50% of a new
holding company. The new entity will be formed to acquire existing
industry plants that can be converted into gas-to-liquid (GTL)
hydrocarbon plants using Rentech's Fischer-Tropsch technology. Republic
Finance will arrange financing for acquiring and converting the existing
facilities into GTL plants. Rentech is to provide its technology and
expertise for operation of the converted plants.
Rentech is not issuing any of its securities or paying any cash to
Republic Finance in connection with the agreement. Rentech retains
rights to separately develop and own GTL plants for conversion of natural
gas, flared gas, industrial off-gases, and other types of carbon-bearing
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feedstock, subject only to the terms of its license agreement with Texaco
Natural Gas, Inc. dated 8 October 1998.
The new holding company co-owned by Rentech and Republic Finance
will form new entities to separately own and operate each GTL plant
subject to this arrangement. The holding company may have an equity
interest in each separate plant entity, and expects that additional
investors or existing plant owners or operators will acquire equity
interests in the individual plants.
Rentech and Republic Finance are currently negotiating to acquire
one existing plant. Up to four more have been identified as potential
projects. The agreement between Rentech and Republic Finance
contemplates up to twenty projects in all, although the number of
existing plants that may be available for purchase on economically
reasonable terms cannot be determined at this time. The production
capacities of the converted plants are expected to range from around
1,000 barrels per day to 10,000 barrels per day, with a projected average
capacity of 5,000 barrels per day of GTL products.
The agreement specifies that Rentech and Republic Finance will
divide fees, royalties, and any carried interests from any converted
plants acquired by them on the following basis:
Type of Revenue Rentech Republic Finance
------------------------ ------- ----------------
Project Development Fee 50% 50%
Financing Fees 50% 50%
Fischer-Tropsch License Fee 100% 0%
Fischer-Tropsch Royalties 100% 0%
Catalyst Sales 100% 0%
Retained Equity Interests 50% 50%
Rentech expects that the new holding entity will be able to charge
project development fees for each plant to be converted to GTL.
Rentech's previous license fees have been $1,000 per daily barrel of
production. Rentech also anticipates that its Fischer-Tropsch royalties
and catalyst sales due on each barrel of the daily production from the
plants will produce substantial revenues for it. The new holding company
anticipates charging customary financing fees in the range of 2% of the
financing provided.
The GTL plants are expected to produce a mix of clean diesel fuel,
naphtha and specialty product feedstocks. Diesel fuel made in the past
by Rentech in the Company's five pilot plants as well as its Synhytech
commercial-scale plant substantially exceeds all clean diesel fuel
specifications throughout the world, including Sweden's Class I, the most
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stringent of all specifications, as well as U.S. regulatory requirements.
Sulfur and aromatics were below detectable limits, and the fuel's cetane
index (a measure of the fuels' energy content--comparable to the octane
of gasoline), was about 76, some 80% higher than required by the state of
California. It is expected that there will be a substantial market for
Rentech's clean-burning Fischer-Tropsch diesel for blending with
commercial diesel to enable cities across the U.S. to meet their
requirements to convert municipal fleets to environmentally-friendly
alternative fuels. Rentech naphthas, also aromatic and sulfur free, are
expected to be an attractive chemical feedstock.
Certain portions of this report constitute forward-looking
statements about Rentech's plans, objectives and future performance. The
words "anticipate," "believe," "expect," "estimate," "project,"
"substantial," "significant," "will," "may" and similar expressions
identify forward looking statements. Although Rentech believes its
statements to be reasonable, the forward-looking statements involve risk
and uncertainties. There can be no assurance that actual results, such
as the ability of Rentech to acquire or obtain financing for existing
industry plants, obtain the described fees, royalties and other charges,
successfully convert existing plants, secure equity owners, or compete
with larger companies will be accomplished. Moreover, other risk
factors, as described in the Company's periodic reports filed with the
Securities and Exchange Commission, could cause actual results to differ
from those anticipated by forward-looking statements contained in this
report.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned "hereunto duly authorized.
RENTECH, INC.
By: (signature)
------------------------------------
Ronald C. Butz, Vice President,
and Chief Operating Officer
Date: May 18, 1999
