Rentech files bankruptcy, sells Atikokan, NEWP pellet plants

By Anna Simet | December 28, 2017

Less than 90 days after Rentech announced it would voluntarily withdraw the company’s common shares from listing on the Nasdaq Capital Market, the company has filed for bankruptcy, and sold off the bulk of its assets, including one of its Ontario wood pellet plants, and U.S. wood pellet business New England Wood Pellet.

Rentech’s Wawa, Ontario, pellet plant has been plagued with operational issues over the past couple of years, resulting in contract shortcomings to pellet customer Drax, which has converted three of six units at its North Yorkshire, England, power station to wood pellets. The Wawa facility has been idle since early this year, and in October, Rentech announced it had entered into a deed of contract termination between Drax and the Wawa plant.

Despite Rentech’s Atikokan, Ontario, plant conveyor system issues, the plant has been meeting expectations, operating near capacity when needed, and meeting contractual obligations with Ontario Power Generation, according to Rentech. However, since February, it has only been operating at levels to fulfill its contract with OPG. 

Despite its financial turmoil, in Rentech’s most recent quarterly financial results report, the company stated it expects its New England Wood Pellet and Fulghum Fibers businesses to continue to generate positive cash flow, and be self-sufficient from a liquidity perspective. Rentech acquired NEWP in May 2014, which added to its portfolio three pellet facilities in  Jaffrey, New Hampshire, and Schuyler and Deposit, New York.

The bankruptcy filing lists Lignetics of New England Inc. as the buyer of Rentech’s NEWP business, and persuant to the NEWP asset purchase agreement, Lignetics has agreed to acquire substantially all of the assets and assume certain specified liabilities of Rentech, for a purchase price of $35 million.

The purchase of NEWP adds to Lignetics current annual capacity of 650,000 tons. It purchased the Marth Companies in May, which included four pellet plants and trucking assets. The NEWP acquisition will bring the companies’ total pellet plant count to 12, with facilities located all across the U.S.

Rentech’s Atikokan facility will be purchased by Ontario Inc., an affiliate of True North Timber, a forest resources company in Ontario, according to the filing. Pursuant to the Atikokan asset purchase agreement, Ontario Inc. has agreed to acquire substantially all of the assets and assume certain CAD$3.2 million.