Dolphin III Seeks RTK/RNF Value Maximizing Strategic Alternatives Process; A Rapid Spin-Off Of RTK's Wood Fibre Businesses -- S

 Dolphin III Seeks RTK/RNF Value Maximizing Strategic Alternatives Process; A
 Rapid Spin-Off Of RTK's Wood Fibre Businesses -- Sees Significant RTK Share
                                    Upside

PR Newswire

GREENWICH, Conn., June 26, 2014

GREENWICH, Conn., June 26, 2014 /PRNewswire/ -- Dolphin Limited Partnership
III, L.P. and certain affiliates ("Dolphin III"), a long-term sizable holder
of Rentech, Inc. (NASDAQ symbol: RTK or the "Company"), today announced that
it is informing RTK's shareholders of certain strategic initiatives Dolphin
has advocated to RTK as a result of its interaction with the Company during
the past 18-months in order to enhance the value of Rentech Nitrogen Partners,
L.P. (NYSE symbol: RNF) and generate a significant increase in RTK's current
share price: (i) the rapid spin-off vs. an IPO (which is subject to a
customary discount, underwriting fees and market risk) in a Master Limited
Partnership ("MLP") of its wood fibre processing businesses; and (ii) the
establishment of a strategic alternatives process to maximize value for RTK's
59.8% interest in RNF. Dolphin III believes that a successful strategic
alternatives process that drives RNF to approximately $30 per unit would
generate a near 50% increase in RTK's current share price.

A spokesperson for Dolphin III added, "With an expeditious spin-off of the
wood fibre processing businesses, the strategic alternatives process should
explore: (i) methods to efficiently recombine the remainder of RTK (23.25
million RNF units, its General Partner and sizable federal and state NOL's)
with RNF to create a more sizable and liquid MLP; (ii) repurchasing RNF units
to capitalize on the severely depressed price (currently a significant
discount to the replacement value of its facilities); and (iii) a sale to a
strategic acquirer.^1 

From October 2012--May 2013, Dolphin III and its outside advisors presented a
plan that, in its view, would have efficiently recombined RTK and RNF in a new
MLP (the "Dolphin III Plan"). Since then, with RNF down more than 50% and
greatly underperforming its peers, lower projected cash distributions, and
larger RTK NOL's, the review should also include a re-examination of the
Dolphin III Plan. (The Dolphin III Plan is summarized in the attached
addendum.)^1 More recently, Dolphin III's outside advisors also identified
potential opportunities for RTK and RNF to create value with and without a
recombination.

Reasons for Dolphin III's Advocacy
Dolphin III, with the assistance of prominent outside advisors, advocates
these positions after 18-months during which it communicated extensively with
RTK and its outside advisors as well as consideration given to other facts and
developments^1 –

  oRTK's historical business plan has utilized cash distributions from RNF to
    invest in enterprises unrelated to RTK's core RNF Nitrogen fertilizer
    business and which, in the aggregate, has generated a sizable cumulative
    deficit for RTK and reduced value on an absolute and relative basis for
    RNF holders;^2 ,3
  oRNF remains captive inside RTK, which should be resolved to maximize value
    - the Dolphin III Plan addresses this. Dolphin believes that greater
    consideration is required of RNF's relative size (approximately 1.0
    million annual metric tons of Ammonia, UAN and liquid and granular Urea -
    excluding other products and the Pasadena, Texas, Agrifos facility - and
    an approximate $.9 billion current TEV) to that of its competitors,
    premium pricing from its mid-corn-belt location and proximity to customers
    and natural gas. Resolving the highly inefficient RTK/RNF structure would
    enhance RNF as an attractive acquisition candidate -- especially to
    cross-border competitors^2;
  oRTK and RNF appear significantly undervalued on absolute and relative
    terms;
    --Since December 31, 2012, the percentage decline in RNF's total return
    (unit price plus distributions) -- is approximately (-50%) vs. (-2%) for
    the average total return of the seven other publicly traded peers. RNF's
    percentage decline is over 2 x's that of the next worst performing peer^3;
    --RNF's current TEV approximates 50% of the estimated net replacement
    value of its facilities when certain competitors have indefinitely delayed
    greenfield projects^4, highlighting theacquisition value of existing
    strategic operating assets;
    -- The pre-tax intrinsic value of RTK's net assets, with RNF units at
    $16.32 and RTK'sother net assets valued at $1.63 per share, is
    approximately $2.95 per share. Yesterday, RTKclosed at $2.43^5;
    --The pre-tax intrinsic value of RTK's net assets with RNF units at $30
    (a TEVapproximating 75% of RNF's estimated net replacement value) is
    approximately $4.05 per share, more than a 65% increase from yesterday's
    closing price^5.
    --The public analysis provided by RNF for 2014 EBITDA indicated a cash
    distribution of approximately $2.40 per unit, or over a 14% current yield
    -- materially greater than any otherpublic sector MLP or corporate
    peer.^3,5

The Dolphin III spokesperson concluded, "RNF does not appear to be large
enough to be standalone, but given certain favorable attributes, including the
"transportation cost advantage" of its East Dubuque, Illinois facility and
current industry and capital market dynamics, Dolphin believes it would be
attractive, in particular, to certain domestic and cross-border strategic
acquirers. Utilizing the current implied pre-tax market value of the wood
fibre processing businesses in a spin-off, together with the other net assets
(approximately $470 million or $1.63 per fully diluted RTK share), an
efficient sale of RNF (under the Dolphin III Plan, or an alternative plan) at
$30 per unit, would generate total pre-tax value to RTK shareholders of
approximately $3.63 per share*, nearly a 50% increase from yesterday's
$2.43.The Dolphin III Plan appears to add over 20% of value to RTK
shareholders standalone or in a sale. Importantly for all RTK shareholders
and RNF unit holders, today the Dolphin III Plan may initiate a sale of the
recombined entities to a strategic acquirer."

To learn more about the Dolphin III Plan investors may refer to the attached
addendum and the contacts below.

Dolphin's private investment entities have an extensive record of working to
deliver value for all shareholders and constructively engaging with
managements and Boards.

* 1 RTK = $1.63 of wood fibre spin-off + .0667^** of RNF @ $30/unit.
** (34.8 million New RNF units X 55% /287 million fully diluted RTK shares)

ADDENDUM

THE OCTOBER 2012 ORIGINAL DOLPHIN III RECOMBINATION PLAN

  oA $65 million ($0.27 per fully diluted share) special dividend/return of
    capital^6;
  oThe separation of RTK's previous alternative energy assets with working
    capital via a tax-efficientspin-off or rationalization of these assets --
    enabling the "right–sizing" of RTK's corporate overhead. Today, a
    spin-off or leveraged spin-off of the wood fibre processing businesses in
    an MLP should be pursued expeditiously (a spin-off avoids the customary
    IPO discount, underwriting fees and market risk)^7; and
  oThe efficient recombination of the remainder of RTK (consisting of 23.25
    million RNF units, its General Partner and sizable Federal and State NOLs)
    with RNF by way of a tax-free exchange of RTK shares and RNF public units
    for units of a substantially more liquid newly established MLP ("New RNF")
    with enhanced pre-tax distributions per unit. RTK, with its remaining net
    assets, would become a wholly-owned subsidiary of New RNF.

Under the Dolphin III Plan, RNF and RTK holders would own approximately 45%
(vs. 40.2% today) and 55% (vs.59.8 % today), respectively, of New RNF's 34.8
million fully diluted shares to be outstanding.^8 There would be nonecessary
change in RNF's capital structure or operations, and no change-in-control
under the $320 million 6.5% second lien notes due 2021, issued by RNF in April
2013.

Substantial Benefits and Fairness under the Dolphin III Plan for RTK and RNF
Holders
Dolphin III and its outside advisors believe that the Plan presented in
October 2012 offered substantial benefits to RTK and its holders and was of
material benefit to and was eminently fair to RNF and its holders. Under the
Dolphin III Plan, both RTK and RNF holders, through their interests in New
RNF, would have received improved pre-tax distributions per unit.Both RNF
and RTK holders would have received a greater after-tax present value upon the
sale of their interests in New RNF. As an additional permanent benefit, a
meaningful portion of New RNF's taxable income would have been taxed at the
new 23.8% "all-in" individual highest federal income tax rate on qualified
dividends vs. the new 43.8% "all-in" federal income tax rate on current
ordinary income and cumulative deferred income realized upon the sale of
units.

The Key Benefits to RTK and its shareholders were:

  oAn approximate 50% aggregate increase in the value of their interests at
    the then RTK and RNF prices;
  oEfficiently addressing "double taxation" on fully taxable distributions
    received from RNF once RTK's NOLs were utilized; and
  oEnabling RNF, through New RNF, to be acquired tax free without any
    significant adverse tax consequences to RTK and its holders.

The Key Benefits to RNF and its unit holders were:

  oA 9% increase in pre-tax distribution per unit at New RNF vs. RNF and an
    expected corresponding unit price increase;
  oNew RNF would have had approximately 34.8 million units outstanding and
    public float vs. RNF's 15.6 million public float^8;
  oNew RNF would have owned its General Partner and be controlled by its unit
    holders; and
  oRTK's control of RNF would no longer impede an acquisition of RNF.

The Dolphin III spokesperson added, "After an extensive review, Dolphin III
and its outside advisors, in highly detailed communications, addressed all of
RTK's questions and demonstrated that there appear to be no material technical
or other defects in the proposed transaction that materially alter its
compelling nature, especially after individual federal tax rates for qualified
dividends and capital gains were resolved. Whether examining the transaction
on current yield, or pre- and after-tax present values, the Dolphin III
proposal showed a significant net increase in total value for RTK holders and
real value and material net benefits to RNF holders."

"This transaction would have efficiently recombined RTK and RNF in a new,
substantially more liquid MLP with enhanced distributions and eliminated the
RNF control discount. Today, the transaction appears to improve the
attractiveness of RNF as an acquisition candidate when purchasing operating
assets in the market appears significantly less expensive than new
construction."

"Further, the Dolphin III Plan was designed when RNF was more than double its
current unit price, had substantially greater projected cash distributions and
smaller NOL's. Current facts make the Dolphin III Plan even more compelling.
These value-creating opportunities for RNF are currently impeded as RTK holds
59.8% of RNF and owns its General Partner. An efficient recombination of RTK
and RNF (in a new MLP) provides an opportunity to maximize value for holders
of both entities, standalone or in a strategic alternatives process."

^1On December 9, 2013, Mosaic Company (NYSE ticker symbol: MOS) announced a
plan to repurchase for approximately $2.0 billion, 43.3 million Class A
shares. On February 11, 2013 MOS announced an additional one billion Class A
and Common share buyback in open market and/or private transactions. Both
repurchase plans represented approximately 15% of the total shares
outstanding. In a November, 2013 letter to the RTK Board Chairman, Dolphin
advocated the repurchase of up to 15% of its fully diluted shares with the
shares trading at approximately $1.75. RTK did not pursue this proposal.
RTK, in its March, 2013 earningsreport, indicated that it had spent
approximately $1.0 million on tax and advisory work to evaluate restructuring
proposals by shareholders.
^2Although the RNF holdings represented approximately 75% of RTK's pre-tax net
asset value, the 18-peers reflected in RTK's2012 and 2013 proxy statements do
not include fertilizer companies. Here we are specifically referring to RNF's
$158 millionAgrifos acquisition with $56 million of add on projects and RTK's
alternative energy projects. "From inception on December 18, 1981 through
December 31, 2013, we have an accumulated deficit of $385.3 million."
(Source: 2013 RTK 10K). In 2013, 79% of East Dubuque's revenue was sold
through a distribution agreement with Agrium expiring in June 30, 2016 with
certain renewal options. Also, 14% of 2014 sales were made directly or
indirectly to Agrifos.
^3Rentech Nitrogen Partners, L.P. (RNF) has an approximate $700 million market
capitalization as compared to its public competitors, whose ticker symbols and
approximate equity market capitalizations are as follows: Yara International
(YAR.OL)-U.S. $13.9 billion; CF Industries, Inc. (CF) – $12.6 billion;
Terre Nitrogen Company, L.P. (TNH) – $2.7 billion; CVR Partners, L.P. (UAN)
–$1.4 billion and net cash flow; Potash Corporation of Saskatchewan, Inc.
(POT) – $32.1 billion; The Mosaic Company (MOS) – $19.2 billion; Agrium, Inc.
(AGU) – $13.2 billion. (Source: Bloomberg.) On July 29, 2013 a private
investment firm announced an unspecified stake in CF causing the shares to
initially jump 12%. The private investment firm advocated a significant
increase in the dividend (Source: Dow Jones).
^4On June 2013, YAR.OL announced the deferral of a 1.3 million metric ton
Ammonia/Urea expansion project at its Saskatechewan, Canada Belle Plain
facility at a cost analysts estimated to be $2 billion (Source: Reuters); AGU
announced a deferral of a $3 billion, 1.8 million ton nitrogen facility in the
US Midwest, citing increasing construction costs and pricing concerns (Source:
Bloomberg). In August, 2012 RTK/RNF senior management indicated that RNF had
an approximate $1.5 billion replacement value before its $97.8 million
expansion project and the November 2012 Agrifos acquisition for approximately
$158 million plus $56 million of add on investments.
^5Prior to the issuance of $100 million of 4 ½% preferred shares convertible
into approximately 45.0 million shares or 16.5% of the fully diluted shares,
there were approximately 242 million fully diluted shares (TSM-at RTK share
prices between $2.60-$3.65 (227.5 million shares outstanding, 3.5 million
options @$1.59, plus 1.3 million warrants @$.57 and 11.3 million RSU's and
PSU's (Source: RTK 2013 10K), and an estimated $175 million of net other
assets: the investment in the wood fibre processing business of $125.5
million (May 2, 2013 Investor Presentation) $22 million of projected of 2014
EBITDA after $15.0 million of unallocated cash corporate overhead; $136.1
million Federal NOL, X35% (Source: March 11, 2014 Earnings Report). However,
the 2013 RTK 10K suggests that the cost of the wood fibre and pellet
businesses will be approximately $157 million. On May 1, 2014 RTK announced
the acquisition of New England Wood Pellet for approximately $45.1 million
including assumed debt. On June 16, 2014, RTK announced a series of long-term
processing agreements with subsidiaries in Chile for $8.6 million. The RNF
units held by RTK have no tax basis (April 2012 investor presentation). On
February 12, 2014, RNF issued a public announcement with 2014 EBITDA
sensitivity analysis prepared by a third party consulting firm. The base case
indicated $123.1 million in EBITDA. A prominent sell side research firm
indicated that the "base case" yields annual cash distribution of $2.43 per
unit before any replacement of a working capital reserve of $.20-$.40/unit.
On February 13, 2014, RNF indicated that it was not providing guidance on cash
distributions per unit until later in 2014. No distribution update was
provided with RNF's March 11, 2014 earnings report.
^6In December, 2012 RTK distributed $.19/outstanding share ($42.5 million) in
a dividend/return of capital.
^7These assets previously included a significant amount of net cash, as well
as remaining alternative energy assets. RTK's substantial net cash was
subsequently deployed in the wood fiber processing businesses. Natchez was
sold for $9 million in August, 2013. In March, 2014 the alternative energy
technologies and the PDU were sold for $15.3 million plus $16.2 million upon
the successful redeployment and startup of the PDU less $5.1 million of
transaction expenses. On September 23, 2013, RTK obtained a $100 million
three-year revolving loan facility initially secured by 15.4 million RNF units
and, under certain circumstances, up to 19.4 million units. On April 9, 2014,
RTK announced a new $50 million term loan to replace the outstanding balance
on the term facility. In addition, a $100 million of preferred stock
convertible into approximately 45.0 million shares (convertible at $2.22) was
added. On February 13, 2014, RTK announced "the continuation of its announced
strategy to expand the wood fibre processing businesses and progress toward a
potential IPO as an MLP in less than two years for this business. In its
March 11, 2013 earnings reports, RTK provided 2014 guidance of $22 million of
EBITDA after $15.0 million of unallocated cash – corporate overhead."
^8RNF currently has a 15.6 million public float with approximately 39.0
million fully diluted units outstanding.



SOURCE Dolphin Limited Partnership III, L.P.

Contact: Jeffrey S. Lloyd, Sitrick and Company, Los Angeles, CA 90067, (P)
310-788-2850, (F) 310-788-2855; Jonathan E. Salzberger, Innisfree M&A
Incorporated, New York, NY 10022, (P) 212-750-5571, (F) 212-750-5799
 
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