Rentech acquires New England Wood Pellet

Wood pellet producer Rentech has acquired New England Wood Pellet (NEWP), the largest producer of wood pellets for the US heating market.

NEWP operates three wood pellet facilities with a combined annual production capacity of 240,000 tonnes. These plants are strategically located in the US Northeast, which is the largest domestic market for consumption of wood pellets for heating.

'The acquisition brings additional cash flows and profitability to our wood fibre business. In addition, NEWP's business broadens our offerings, customer base and geographic markets,' explains Hunt Ramsbottom, president and CEO of Rentech.

Approximately 1.5 million tonnes of wood pellets are consumed annually in the US Northeast and, according to independent forecasts, wood pellet consumption in the region is expected to increase at an annual growth rate of 7% through 2018. Customer demand for wood pellets in this market exceeds available regional production.

'By producing access to the domestic heating market, the acquisition broadens Rentech's wood pellet product offerings, expanding its customer base, and opens up new geographic markets,' Rentech said in a statement.

The acquisition, totalling $34.5 million in cash, is immediately accretive to Rentech's wood fibre processing business. Consistent with its 2013 performance, NEWP's business is forecasted to have revenues of approximately $44.8 million, operating income of around $4.6 million and EBITDA of approximately $7.6 million for the 12 months ending 31 December 2014.

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