Canadian Biomass Magazine

Features Pellets
Rentech expands further

Feb 23, 2015, Los Angeles - Rentech announced today that its subsidiary, New England Wood Pellet (NEWP), has acquired the assets of Allegheny Pellet Corporation (Allegheny). The acquisition expands NEWP's market position as the largest producer of wood pellets for the U.S. heating market.


February 23, 2015
By Business Wire

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“Consistent with the growth strategy we outlined when we acquired NEWP, we are pleased to expand NEWP’s platform with the acquisition of Allegheny,” said Sean Ebnet, senior vice president of Rentech’s wood fibre business.

Allegheny’s wood pellet plant in Youngsville, Pennsylvania has been operating since 1993. The facility processes residuals from local sawmills into wood pellets for sale through big box stores, specialty retailers and bulk sales channels. The plant has historically experienced relatively stable feedstock costs due to a consistent supply of residuals within an economic haul radius of the facility. Allegheny’s customers are responsible for the costs and logistics arrangements of pellet deliveries. Allegheny will be fully integrated into NEWP and will operate as its fourth pellet plant.

NEWP intends to expand the plant’s annual production from approximately 36,000 tons under a four-day workweek to approximately 50,000 tons under a seven-day workweek. The additional production will help meet strong demand for pellets in Pennsylvania and New York. Allegheny is expected to generate approximately $10 million in revenues and $1.5 million in EBITDA annually once operating full-time.

NEWP acquired all of the assets of Allegheny for approximately $7 million in cash, using the proceeds of a 5-year, $8 million term loan from TD Bank, N.A. The term loan amortizes over 7 years, has an interest rate of LIBOR plus 2.25 percent, and contains financial covenants that may restrict distributions from NEWP to Rentech.

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NEWP expects to invest over the next 2 years approximately $2 million of available cash in environmental and safety improvements at the plant.


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