Rentech acquires majority stake in ClearFuels

In Washington, Rentech announced that it has given notice of exercise of its option to acquire a substantial majority of the equity of ClearFuels Technology, with existing ClearFuels investors retaining a minority interest. The transaction will be accomplished through the merger of a subsidiary of Rentech into ClearFuels, with ClearFuels continuing as the surviving company in the merger.

At present, Rentech owns 25% of ClearFuels, a project development company with proprietary reformation technology for the gasification of biomass. Under a Project Support Agreement signed in September 2010, Rentech assumed control of the two companies’ joint integrated bio-refinery project which is being funded in part by a $23.0 million grant from the U.S. Department of Energy. The grant is partially funding construction of a demonstration-scale ClearFuels biomass gasifier at Rentech’s Energy Technology Center. Upon completion late this year, the gasifier will be integrated with Rentech’s Product Demonstration Unit to produce certified renewable synthetic jet and diesel fuels from cellulosic biomass feedstocks.

The option was exercised pursuant to the terms of an option agreement signed by the two companies in September 2010. The merger is expected to close within a month. The companies expect no interruption of the project and technology development activities of ClearFuels.

Consideration for the shares of ClearFuels to be acquired by Rentech consists of the obligations taken on by Rentech in the Project Support Agreement to support the construction of the ClearFuels technology at Rentech’s PDU.  In connection with the transactions contemplated by the option agreement and the Project Support Agreement, Rentech will also issue a warrant to purchase approximately two million shares of Rentech common stock and provide the minority shareholders in ClearFuels with a carried interest in the Hawaii project, if that project is successfully developed.