WASHINGTON – (BUSINESS WIRE) – Rentech, Inc. (NASDAQ: RTK) announced Tuesday that its board has decided to idle the Wawa facility due to equipment and operational issues that would require additional unbudgeted capital investment. This decision also results from continued uncertainty around profitability on pellets produced at the facility, making additional investment in the facility uneconomic for Rentech at this time.
Idling the plant will allow Rentech to conserve liquidity as it formally explores strategic alternatives for the plant including ongoing discussions with third parties. In conjunction with the strategic review of the Wawa facility, Rentech is also exploring strategic alternatives for the Company as a whole.
In addition to these announcements, Rentech is providing updates on its other operating businesses.
- Wawa facility continues to experience equipment and operating challenges;
plant is being idled to reduce near-term cash needs in Canada and preserve liquidity for Rentech (the Company)
- Atikokan facility production being reduced to levels required to fulfill OPG off-take contract
- Pellet sales at NEWP continue to be sluggish
- Customer plans to exercise purchase option for two of Fulghum’s U.S. mills
- Exploring strategic alternatives for Wawa facility and the Company as a whole
As noted in prior communications, the Wawa facility experienced equipment and operating challenges subsequent to the replacement of problematic conveyors last fall. These issues have persisted.
On February 16, 2017, our board made the decision to suspend operations at the facility. This decision is based in part on our review of the work by a third-party engineering firm to identify necessary capital improvements. While we believe that the issues we have been experiencing at the facility can be resolved with additional capital investments, we have concluded that it is not economical to pursue those investments or to continue to operate the facility at this time. Rentech’s other businesses, including its Atikokan facility, continue to operate without interruption.
As a result of this decision, the Wawa operations team will immediately begin a safe and orderly idling of the facility, which the Company expects to complete in approximately two weeks. When the facility is successfully idled, a small workforce will remain in place to maintain the plant so that it can resume operations with minimal cost and time if there is interest from a third party to invest in or purchase the facility. The remainder of the workforce will be placed on a temporary layoff while options for the facility are explored.
Rentech expects to incur a significant asset impairment charge relating to the Wawa and Atikokan facilities in its fourth quarter 2016 results.