As filed with the Securities and Exchange Commission on May 25, 2000
Registration No. 333-34890
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-3/A
Registration Statement Under
THE SECURITIES ACT OF 1933
-------------------------
RENTECH, INC.
(Exact name of Registrant as specified in charter)
Colorado 84-0957421
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
1331 17th Street, Suite 720
Denver, Colorado 80202
(303) 298-8008
(Address, including zip code and telephone number, including area code,
of registrant's principal executive offices of business)
-------------------------
Dennis L. Yakobson
President and Chief Executive Officer
Rentech, Inc.
1331 17th St. Suite 720
Denver, Colorado 80202
(303) 298-8008
(Name, address and telephone number of agent for service)
Copies to:
Loren L. Mall, Esq.
Brega & Winters P.C.
1700 Lincoln Street, Suite 2222
Denver, Colorado 80203
(303) 866-9404
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective, as the
selling shareholders determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date or dates as
the Commission, acting pursuant to said Section 8(a), may determine.
-------------------------
PAGE 2
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------
Title and Class
of Securities Amount to be Proposed Maximum Proposed Maximum Amount of
to be Registered Registered(1) Offering Price Aggregate Offering Registration
per Unit(2) Price(1) Fee
- ---------------- ------------- ---------------- ---------------- ------------
Common Stock 7,410,560 $3.28125 $ 24,315,900.00 $ 6,419.40
Common Stock Under-
lying Stock Options(3) 6,394,000 $3.28125 $ 20,980,312.50 $ 5,538.80
Common Stock Under-
lying Stock Purchase
Warrants(3) 186,000 $3.28125 $ 610,312.50 $ 161.12
Total 13,990,560 $3.28125 $ 45,906,525.00 $12,119.32
- ------------------------------------------------------------------------------------------------
<FN>
<F1> Subject to adjustment pursuant to the anti-dilution provisions of the securities
being registered on this Form, as allowed by Rule 416.
<F2> Based on average of the high and low sales prices quoted on AMEX on April 12, 2000,
within five days of the filing date, pursuant to Rule 457(c). Estimated solely for
the purpose of calculating the registration fee pursuant to Rule 457(c).
<F3> Exercise of these stock options and warrants to purchase common stock, and issuance
of additional shares of common stock and convertible securities that may be issued by
Rentech, would reduce the percentage ownership of persons who purchase common stock
in this offering, and other shareholders, and dilute the book value of the common
stock held by them.
</FN>
PAGE 3
Subject to Completion, Dated May 25, 2000
P R O S P E C T U S
RENTECH, INC.
13,990,560 Shares
Common Stock
We are an energy company headquartered in Denver, Colorado. Our
technology converts gases derived from carbon-bearing materials, either
natural gas or liquids or solids, into synthetic liquid hydrocarbons
(gas-to-liquids or GTL Technology). The products include
clean-burning diesel fuel, naphthas used for making gasoline and certain
petrochemicals, and specialty products such as petroleum waxes,
petrochemical feedstocks and synthetic lubricant base oils.
Trades of our common stock are reported on the American Stock
Exchange under the symbol RTK.
The common stock is offered for sale by the selling shareholders
identified in this prospectus.
------------------
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS
BEGINNING ON PAGE 13 BEFORE MAKING AN INVESTMENT IN OUR COMPANY
------------------
Neither the Securities and Exchange Commission nor any state
securities commission has approved our common stock or determined that
this prospectus is accurate or complete. Any representation to he
contrary is a criminal offense.
____________________, 2000
PAGE 4
TABLE OF CONTENTS
Page
----
About this Prospectus . . . . . . . . . . . . . . . . . . . . . . 4
Where You Can Find More Information . . . . . . . . . . . . . . . 5
Note of Caution Regarding Forward-Looking Statements . . . . . . 6
Description of the Company . . . . . . . . . . . . . . . . . . . 7
--The Company . . . . . . . . . . . . . . . . . . . . . . . . 7
--The Rentech GTL Technology . . . . . . . . . . . . . . . . . 8
--Business Strategy . . . . . . . . . . . . . . . . . . . . . 8
--New Developments . . . . . . . . . . . . . . . . . . . . . . 11
--Other Businesses . . . . . . . . . . . . . . . . . . . . . . 11
----OKON, Inc . . . . . . . . . . . . . . . . . . . . . . 11
----Petroleum Mud Logging, Inc. . . . . . . . . . . . . 11
----ITN Energy Systems, Inc. . . . . . . . . . . . . . . 12
----Global Solar Energy LLC . . . . . . . . . . . . . . 12
----ITN Electronic Substrates LLC . . . . . . . . . . . . 13
--Executive Officers . . . . . . . . . . . . . . . . . . . . . 13
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 21
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . 22
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . 24
Description of Common Stock and Preferred Stock . . . . . . . . . 25
Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ABOUT THIS PROSPECTUS
This prospectus may be used by our shareholders identified under the
heading "SELLING SHAREHOLDERS" with their sale of shares of common stock
which they own or acquire from us by the exercise of stock options or
stock warrants. The Selling Shareholders or their transferees may also
sell their shares of common stock by complying with Rule 144 or Rule 144A
adopted by the Securities and Exchange Commission (SEC) under the
Securities Act of 1933 if the requirements of those rules have been
satisfied.
The Selling Shareholders will receive all of the proceeds from their
sales of common stock. Our Company will not receive any money from sales
made by them.
This Prospectus provides you with a general description of our
Company and of our common stock. You should carefully read this
prospectus and the documents referred to in this prospectus under the
heading "WHERE YOU CAN FIND MORE INFORMATION."
PAGE 5
You should rely only on the information provided in this prospectus
or incorporated into this prospectus by reference. We have not
authorized anyone to provide you with different information. You should
not assume that the information in this prospectus is accurate after the
date of this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement with the SEC relating to
sales by the Selling Shareholders of their shares of common stock. This
prospectus is part of that registration statement, but the registration
statement also contains additional information and exhibits. We also
file proxy statements, annual, quarterly and special reports and other
information with the SEC. You may read and copy (upon the payment of
fees charges by the SEC) any document that we file with the SEC at its
public reference rooms in Washington, D.C. (450 Fifth Street, N.W.,
Washington, D.C. 20549), New York, New York (7 World Trade Center, Suite
300, New York, New York 10048), and Chicago (500 West Madison Street,
Suite 1400, Chicago, Illinois 60661). You may call the SEC at 1 (800)
SEC-0330 for further information about the public reference rooms. Our
filings are also available at the SEC's website at http://www.sec.gov.
Our Internet address is http://www.rentechinc.com.
The SEC allows us to incorporate documents in this prospectus by
reference. This means that we can disclose important business, financial
and other information in our SEC filings by referring you to the
documents containing such information. All information incorporated by
reference is part of this prospectus until it is updated by future
filings with the SEC. Those future filings are considered to
automatically update this prospectus.
We incorporate by reference into this prospectus the documents
listed in the following table:
Our SEC Filings Period
--------------- ------
Annual Report on Form 10-KSB Year ended September 30, 1999
Quarterly Report on Form 10-QSB Quarter ended December 31, 1999
Quarter ended March 31, 2000
Current Reports on Form 8-K Dated:
October 12, 1999
November 16, 1999
November 24, 1999
February 22, 2000
March 20, 2000 (two reports)
April 4, 2000
PAGE 6
We also incorporate by reference additional documents that we may
file between the date of this prospectus and the termination of the
offering made by use of this prospectus. These documents include
periodic reports such as Annual Reports on Forms 10-KSB, Quarterly
Reports on Forms 10-QSB, Current Reports on Form 8-K, and other reports
filed with the SEC, as well as proxy statements.
You can obtain any of the documents incorporated by reference in
this prospectus from us, other than exhibits to those documents unless
the exhibit is specifically incorporated by reference into this
prospectus as an exhibit. You can obtain documents incorporated by
reference in this prospectus by requesting them in writing or by
telephone from us at the following address and telephone number:
Investor Relations
RENTECH, INC.
1331 17th Street, Suite 720
Denver, Colorado 80202
(303) 298-8008
To ensure timely receipt of documents that you request, you should
make any request to us at least five business days prior to the date you
need them. We will mail materials to you by first class mail, or another
equally prompt means, within one business day after we receive your
request.
NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including information incorporated by reference in
it, contains forward looking statements, within the meaning of federal
securities laws, about the financial condition, results of operations,
plans, objectives, future performance and business of Rentech and its
subsidiaries. Forward-looking statements are based on our management's
beliefs, assumptions and expectations of our Company's future economic
performance, taking into account the information currently available to
them. Forward-looking statements are not statements of historical fact.
Forward-looking statements involve risks and uncertainties that may cause
our Company's actual results, performance or financial condition to be
materially different from the expectations we express or imply in any
forward-looking statements. These statements often can be identified by
use of the words "may," "will," "expects," "believes," "anticipates,"
"estimates," "projects," "potential," "approximate," or "continue." Some
of the important factors and events that could cause our actual results,
performance or financial condition to differ materially from our
expectations include:
PAGE 7
--Results of use of our GTL Technology after scaling it up for use
in commercial size gas conversion plants;
--Acceptance by the energy industry of our GTL Technology;
--Availability of large amounts of capital to us or our joint
venturers or licensees to construct and operate plants using GTL
Technology;
--Economic competitiveness of our GTL Technology with other means of
producing synthetic liquid hydrocarbons and other fuels;
--Economic competitiveness of our GTL Technology with other fuels
and products similar to ours; and
--Other risks described in our other filings with the SEC.
DESCRIPTION OF THE COMPANY
THE COMPANY
Rentech, Inc. is a Colorado corporation organized in 1981 and based
in Denver. It is engaged in the development, marketing and licensing of
its patented and proprietary technology that converts natural gas and
solid and liquid carbon-bearing materials into fuels, products and
chemicals. The Company's gas-to-liquids technology (the Rentech GTL
Technology) is capable of using as feedstock a variety of naturally
occurring hydrocarbons as well as gaseous, liquid and solid hydrocarbons
produced as by-products or waste in various industrial processes.
Feedstocks include high BTU, low sulfur natural gas (so-called sweet
natural gas); lower BTU natural gas; natural gas containing higher than
normal concentrations of carbon dioxide, nitrogen or sulfur; industrial
waste gas; heavy crude oil; refinery by-products; coal; coal fines and
petroleum coke. Principal products produced by use of Rentech's GTL
Technology (GTL products) include clean diesel fuel (ecodiesel), naphtha
(an intermediate product used to make gasoline and certain
petrochemicals) and waxes that can be further processed into
high-value specialty products. These specialty products include
synthetic lubricants, base oils and drilling fluids.
Rentech charges license fees and engineering design fees for use of
its GTL Technology. It also expects to charge royalties based upon the
liquid hydrocarbons produced through use of the Rentech GTL Technology.
Rentech also owns interests in other businesses subsequently
described in this prospectus.
PAGE 8
THE RENTECH GTL TECHNOLOGY
The Company believes that the Rentech GTL Technology represents a
technological development that could provide benefits to the oil and gas
industry, other energy businesses and the environment. The potential
advantages of the Rentech GTL Technology include:
-- Improving refinery economics through more efficient use of heavy and
sour crude oil and refinery residues.
-- Enhancing the value of uneconomic methanol plants or other industrial
plants with costly gas reforming systems in place that can be
retrofitted to make synthesis gas for the production of GTL
products.
-- Allowing natural gas producers to economically develop and produce
remote and substandard gas resources, thus increasing their proved
reserves and revenues.
-- Facilitating efficient co-production of electricity and GTL products
from coal and other feedstocks while significantly reducing harmful
emissions.
-- Increasing available supplies of clean energy and transportation fuel
to help meet the rapidly growing worldwide demand.
-- Producing high-value, high-purity specialty products to meet
increasingly stringent environmental standards and product
specifications.
-- Enhancing U.S. energy security by facilitating expanded use of
relatively abundant coal and natural gas resources for needs
traditionally met by increasing amounts of imported crude oil and
fully refined products.
-- Allowing developers of gas conversion plants using Rentech GTL
Technology to obtain insurance covering performance of the Rentech GTL
process.
BUSINESS STRATEGY
Rentech's business strategy is to achieve use of its technology in
commercial gas-to-liquids projects and to expand its revenue and earnings
through an integrated approach of strategic relationships, technology
licensing and direct project participation. Rentech's strategy is based
upon the following key components:
PAGE 9
--Environmental and Energy Demand Trends. Rentech believes it
can capitalize on several current trends that are impacting the
energy, transportation and environmental industries to achieve
commercial use of the Rentech GTL Technology. These impacts include
increasingly stringent requirements to reduce tailpipe emissions and
strengthen clean-air standards; the contradictory need of refiners
to cost-effectively produce cleaner fuel from increasingly poor
quality crude oils; the regulatory curtailment of natural gas
flaring; economic incentives to profitably develop vast, remote
resources of natural gas; steadily increasing demand for power
around the world; a need to utilize dirty coal for clean power
generation; and the search for a practical fuel source for
transportation fuel cells currently being developed.
--Accelerating Commercialization Through Strategic
Relationships. While the Rentech GTL Technology is not currently
being used in any commercial scale plant, our Company is pursuing
rapid commercial deployment of its technology through a number of
initiatives. To accelerate its efforts and leverage its
technology, Rentech has formed several strategic relationships
with owners of complementary technologies, engineering
capabilities, financial assets or potential projects. These
relationships are designed to broaden use of Rentech's
technology and to accelerate deployment of commercial facilities
that use Rentech's GTL Technology.
--In October 1998, Rentech granted an exclusive technology
license to Texaco Natural Gas, Inc. (now Texaco Energy Systems, a
division of Texaco, Inc.) to use and sublicense the Rentech GTL
Technology in projects where solid and liquid hydrocarbons are used
as feedstock. The license also granted Texaco a non-exclusive
license for conversion of natural gas to liquids. Texaco's
"front-end" synthesis gas reformer units have been deployed in 68
of its own and others' refineries and chemical plants around the
world. Under an expanded Technical Services Agreement signed in
June 1999, Rentech and Texaco are pursuing design work to
integrate Rentech's GTL conversion technology with Texaco's
gasification technology in preparation for commercial deployment.
--In May 1999, Rentech formed a strategic financial
relationship with Republic Financial Corporation of Denver, Colorado
to pursue joint ventures with owners of existing North American
methanol plants to convert those plants to gas-to-liquids
facilities. Retrofitting an existing industrial plant with the
Rentech GTL Technology significantly reduces the construction time
and cost compared to building a greenfield GTL plant. Rentech
believes modification of these existing plants would enhance their
economics with feedstocks including marketable, pipeline-quality
natural gas.
PAGE 10
--In August 1999, Rentech agreed by a letter of intent to grant
Dresser Engineering Company, of Tulsa, Oklahoma, a license by which
Dresser will market Rentech's GTL Technology for projects that
Dresser develops. Dresser will have the exclusive right, except for
Texaco's rights and Donyi Polo Petrochemicals' rights in the country
of India, to provide the engineering services and to design the
synthesis gas reactors that are necessary to use Rentech's
technology. Dresser's participation in marketing and developing
projects is expected to substantially contribute to commercial use
of Rentech's technology.
--In January 2000, Rentech and Republic Financial Corporation
purchased a methanol plant known as the Sand Creek facility,
together with all the supporting infrastructure, buildings, and the
underlying 17-acre site. Rentech and Republic Financial are
developing a plan to convert the facility to a gas-to-liquids (GTL)
plant for production of liquid hydrocarbons such as diesel, naphtha,
petroleum waxes and other products. The new owner of the facility
is Sand Creek Energy LLC, which is 50 percent owned by Rentech
Development Corp., a newly formed, wholly-owned subsidiary of
Rentech, and 50 percent owned by RFC-Sand Creek Development, LLC, a
wholly-owned subsidiary of Republic Financial.
--In March 2000 Rentech granted Texaco Energy Systems, Inc. the
exclusive right to negotiate for Texaco's participation in the
project to retrofit the Sand Creek plant for the planned purpose.
Texaco has the right to evaluate and potentially acquire up to
one-half of Rentech's 50% interest in Sand Creek Energy LLC.
--In March 2000 Rentech agreed in a memorandum of understanding
with FuelCell Energy, Inc. of Danbury, Connecticut to study the
feasibility for locating a commercial scale fuel cell power plant at
the site of the Sand Creek facility, to produce up to 9,000
kilowatts of electricity. The goal is to operate both Rentech's GTL
Technology and FuelCell's fuel cell technology at the site. The
Companies are evaluating use of Rentech's GTL products as
feedstock for the fuel cells.
--In January 2000 Rentech and Jacobs Engineering U.K. Limited
agreed to jointly market their combined capabilities on a worldwide
basis. Jacobs Engineering is a large international engineering firm
that expects to provide engineering services to plants for projects
it organizes for the use of Rentech's GTL Technology. Rentech would
sell licenses and also provide its design and other engineering
services for each plant.
--Rentech also has R&D relationships with Thermal Conversion
Corporation (TCC) of Kent, Washington and Phoenix Gas Systems of
Long Beach, California. The focus of each of these separate
PAGE 11
collaborations is to develop smaller, more efficient and cheaper
front-end synthesis gas units for deployment on platforms in
offshore oil and gas fields, on barges for inland waterway oil and
gas fields and skid-mounted or trailer truck-mounted plants for
smaller onshore oil and gas fields.
NEW DEVELOPMENTS
On March 18, 2000, Rentech sold 1,000,000 shares of its common stock
to Anschutz Investment Company and 1,000,000 additional shares to Forest
Oil Corporation at a price of $.60 per share. In addition, Anschutz
Investment and Forest Oil separately purchased options to acquire an
additional 3,000,000 shares each, 2,000,000 shares at $1.25 exercisable
until December 31, 2001, and 1,000,000 shares at $5.00 exercisable until
December 31, 2004.
Rentech and Forest Oil also signed a memorandum of understanding
that entitles Forest Oil to obtain one or more licenses from Rentech to
use Rentech's GTL technology. Rentech and Forest Oil are evaluating
several potential opportunities for use of the technology at sites of
Forest Oil's natural gas reserves as well as at existing industrial gas
plants.
On March 29, 2000, Rentech sold 2,291,667 shares of its common stock
to Azure Energy Fund with warrants to purchase 2,291,667 more shares of
common stock. The sales price was $2,750,000. The warrants are
exercisable at a price of $2.64 per share until March 29, 2003.
OTHER BUSINESSES
OKON, INC.
In March 1997, Rentech entered into the business of manufacturing
and marketing water-based wood stains, concrete stains, block pluggers
and other water repellent sealers on a wholesale basis by purchasing the
assets of OKON, Inc. (OKON), located in Lakewood, Colorado. The coatings
produced and sold by the OKON subsidiary are biodegradable and
environmentally clean.
OKON has been engaged in the business since 1973. OKON markets and
sells its products nationwide through a variety of channels. These
include distribution through paint dealers, retailers other than discount
retailers and mass merchandisers, industry users, and architects and
building contractors. The formulas used by OKON for manufacturing its
products are proprietary. The brand names of the various products are
recognized throughout the industry.
PAGE 12
PETROLEUM MUD LOGGING, INC.
In June 1999, Rentech entered into the business of providing well
logging services to the oil and gas industry. This occurred through its
purchase of the assets of two established and related companies that have
been providing services in these fields since 1964. Rentech is using the
assets to continue these businesses through its wholly-owned subsidiary,
Petroleum Mud Logging, Inc. The business is operated from Oklahoma City,
Oklahoma. The services are provided to customers located in Oklahoma,
Texas, Kansas, Louisiana and Arkansas.
Petroleum Mud Logging, Inc. owns 18 mobile well logging units that
are moved from well to well. Through state of the art instruments, the
logging equipment measures traces of gases and water throughout the depth
of a well hole by analyzing the drilling mud recovered from the well as
drilling progresses. The results are transmitted to customers
immediately by either land lines or satellite uplink. The mineral owners
use this information to detect the presence of oil and gas deposits in
underground formations.
ITN ENERGY SYSTEMS, INC.
Rentech owns 10% of ITN Energy Systems, Inc. (ITN/ES), a privately
owned Colorado corporation established in 1995. The core technologies of
ITN/ES include a thin film multi-layer deposition process; intelligent
processing; structures and materials; and photovoltaic power system
design, integration, and installation. ITN/ES intends to develop and
commercialize new, innovative products for defense and commercial markets
based on advanced materials and structures technologies.
The current customers of ITN/ES are the U.S. Air Force Research
Laboratory, Defense Advanced Research Projects Agency, the National
Aeronautical Space Administration (NASA), and the U.S. Department of
Energy.
GLOBAL SOLAR ENERGY LLC
ITN/ES owns one-third of an Arizona limited liability company called
Global Solar Energy LLC (Global Solar Energy). Global Solar Energy,
established in May 1996 by Tucson Electric Power and ITN/ES, manufactures
and markets flexible photovoltaic (PV) modules using technology developed
by ITN/ES. The other two-thirds owner of Global Solar Energy is Advanced
Energy Technologies, Inc., a wholly owned subsidiary of Tucson Electric
Power Corporation, which is a wholly-owned subsidiary of UniSource Energy
Corporation.
PAGE 13
The PV modules are used for the production of electricity. Global
Solar Energy utilizes innovative solar technology developed by ITN/ES to
produce Copper Indium Diselenide (CIS), a new class of solar cell
materials in a state-of-the-art facility in Tucson, Arizona. The
facility started production in the third quarter of 1999, and is designed
to annually produce up to 1.5 megawatts of thin-film photovoltaic modules
that are 1/20th the thickness of a piece of paper. The flexible
photovoltaic modules are to be sold for military, space, consumer, and
commercial applications. The plant's production capacity is expected to
be expanded substantially to meet increasing demands for an
environmentally safe energy source. The joint venture expects that the
innovative manufacturing technology used in the new plant can reduce
production costs of PV modules below that of other existing solar energy
technologies. Rentech's ownership interest in ITN/ES provides Rentech an
indirect interest amounting to 5% of Global Solar Energy although the
interest of the owners will be reduced proportionately by any equity
interest granted to a lender of funds used to expand the Tucson plant.
ITN ELECTRONIC SUBSTRATES LLC
In order to facilitate and participate in ITN/ES's development of
other technologies, Rentech and ITN/ES have formed and each own 50% of a
Colorado limited liability company called ITN Electronic Substrates LLC.
The LLC intends to develop and introduce several technologies into the
commercial marketplace that are spinoffs from other developments
originally conceived by the principals of ITN/ES within the aerospace and
military sector. The LLC is seeking a large investment from a third
party to fund its various advanced technologies, none of which have been
fully developed and readied for production. ITN Electronic Substrates
LLC also has technology for production of Radio Frequency Identification
Tags. The RFID tags would be used to identify and locate a wide variety
of objects in which the tags are embedded.
EXECUTIVE OFFICES
Our executive offices are located at 1331 17th Street, Suite 720,
Denver, Colorado 80202, telephone (303) 298-8008, fax (303) 298-8010.
RISK FACTORS
--Lack of Profitable Operations: History of Losses. From inception
on December 18, 1981, through March 31, 2000, the Company has sustained
losses aggregating $16,432,045. For the six months and three months
ended March 31, 2000, the net losses were $1,731,119, and $1,056,214,
respectively. There are no assurances that the Company will operate
PAGE 14
profitably in the future or will be able to acquire additional revenue
producing businesses, or that the Company's licensees will complete
construction of plants using Rentech's GTL Technology, or that any
conversion plants using the Rentech GTL Technology that are completed
will be operated profitably or generate engineering design fees, license
fees, royalties or product revenues for the Company.
--Successful Operation of Plants Using Rentech GTL Technology Not
Assured. The successful use of Rentech GTL Technology by licensees
largely depends upon their ability to design, construct and operate
plants using the Rentech GTL Technology on a commercial scale. The
successful commercial use of plants using Rentech GTL Technology will be
dependent upon a number of factors. These factors include, among others,
the following responsibilities of a licensee: constructing plants that
are properly designed by a licensee for the chemical composition of the
feedstock obtained for the plant; the amount and quantity of the
feedstock; the availability and cost of construction financing;
mechanical adequacy of the plant equipment and machinery, whether related
or unrelated to the Rentech GTL Technology; costs no higher than expected
to separate the catalyst from waxes produced in the gas conversion
process; availability and adequacy of roads, utilities, worker housing
and other infrastructure at the plant site; the plant operator's
management and skills; operating circumstances; and other conditions that
Rentech may not anticipate or control.
--Economic Use of Rentech GTL Technology Not Assured. Rentech's
belief that its technology can be cost effective and that
full-scale conversion plants using the technology can be profitably
operated depends upon the availability of low-cost feedstock, the
economic efficiency of the technology and market demand for the end
products at profitable prices. In the event low-cost feedstock cannot be
obtained, plants using Rentech's GTL Technology may not produce products
for sale at competitive prices. The products of Rentech's GTL Technology
will compete with other petroleum products, including products produced
by similar technology. To a great extent, competition in this business
will be based upon price, although compliance with environmental laws may
create demand for the Company's low aromatic, sulphur-free diesel fuel
even at premium prices. The diesel fuel produced by Rentech's GTL
Technology has not been subjected to long-term engine tests to determine
if there are adverse effects. No in-depth cost or price studies of the
products of Rentech's GTL Technology have been prepared by independent
third parties for the Company. Adverse economic results at plants using
Rentech's GTL Technology would adversely impact Rentech's operating
results and financial condition by depressing its potential income from
the technology.
PAGE 15
--Lack of Adequate Capital to Exploit Rentech GTL Technology. In
situations where Texaco is not using or licensing Rentech's GTL
Technology, the capital cost of gas conversion plants and natural gas
fields or other sources of feedstock that use Rentech's GTL Technology
requires more capital than is available to the Company or to many of its
potential licensees. While the Company does not presently plan to build
its own plants, except to convert existing industrial gas plants, and
expects its licensees to acquire feedstock and build and own plants for
which they are licensed by the Company, many potential licensees of
Rentech's GTL Technology have been unable to finance the construction
costs and acquire feedstock. These limitations have slowed and will
continue to delay use of Rentech's GTL Technology and resulting revenues
to the Company. There are no assurances that joint arrangements with
other better capitalized companies will be available or acceptable to the
Company or that Texaco will commercially use the technology.
--Working Capital. At March 31, 2000, the Company had working
capital of $4,283,108 as compar ed to working capital of $115,457 at
September 30, 1999. The increase in working capital is primarily due to
the net proceeds from the issuance of the Company's preferred stock and
common stock and related warrants to purchase common stock. The net cash
proceeds received from Rentech's recent private placements of its
securities, the revenues generated from the Company's subsidiary
operations, the revenues generated from the Texaco technical service
contract and the Texaco royalty fees are expected to be adequate to fund
the Company's operations at the current level for the near future.
--Need for Additional Financing. To raise capital, Rentech has
recently issued shares of its common stock, and options and warrants to
purchase additional shares of common stock. See the previous section
called New Developments. Rentech has expended and will continue to
expend substantial funds to continue to research and develop its
technologies, especially the Rentech GTL Technology and to invest in
gas-to-liquids projects, such as the Sand Creek project. Rentech intends
to seek additional debt and equity financing in the capital markets.
There can be no assurance that additional financing, when required, will
be available or on terms acceptable to Rentech. If adequate funds are
not available, Rentech may be required to delay or to eliminate
expenditures for certain of its capital projects or to license to third
parties the rights to commercialize additional products or technologies
that Rentech would otherwise seek to develop itself. In addition,
Rentech may obtain additional funds through equity and debt project
financing and collaborative or other arrangements with strategic partners
and others. If additional funds are raised by issuing equity
securities, further dilution to investors may occur. The board of
directors of Rentech is
PAGE 16
currently empowered, without stockholder approval, to issue and has
issued preferred stock with dividend, liquidation, conversion, voting and
other rights that could adversely affect the voting power, equity
ownership and other rights of the holders of Rentech's common stock.
--Success of the Rentech GTL Technology Depends Upon Licensees.
Rentech does not have adequate capital to finance, construct and operate
its own commercial plants. Successful use of the Rentech GTL Technology
therefore depends upon licensees. If any influential licensee such as
Texaco terminates its license or does not proceed to use the technology,
potential licensees are not likely to use the technology. Rentech will
receive royalties and other revenues from operations only from plants
that operate successfully and economically. Under the license agreements
offered by Rentech, it is a licensee's responsibility to obtain sources
of feedstock that provide adequate supplies at inexpensive rates, conduct
feasibility studies, recruit personnel who are skilled in conversion
plants, obtain governmental approvals and permits, obtain sufficient
financing on favorable terms for the large capital expenditures required,
possibly construct infrastructure if not otherwise available at the plant
site, design, construct and operate the plant, market the products, and
perform other significant tasks. The ability of any licensee to
accomplish these requirements, and the efforts, resources and timing
schedules to be applied by a licensee, will be controlled by it. If the
first few commercial-size plants using the Rentech GTL Technology are not
commercially successful, Rentech may be unable to obtain other licensees
in the future. Several licensees have allowed their licenses to expire
because of their inability to meet one or more of the requirements
previously described for a plant. If licensees do not proceed with
plants using the Rentech GTL Technology or do not successfully operate
plants, Rentech's operating results and financial condition would be
adversely affected. In addition, one or more of Rentech's licensees may
pursue alternative gas-to-liquids technology on their own or in
cooperation with others, including Rentech's competitors.
--Competitiveness of the Rentech GTL Technology Not Assured. The
development of gas-to-liquids technology is highly competitive. The
Rentech GTL Technology is based on Fischer-Tropsch processes that have
been used by several others in synthetic fuel projects during the past 60
years. Historic experience has indicated that these applications of the
established processes were not an economic means to create synthetic
fuels. Because of increasing worldwide demand for fuels and other
products of the Rentech GTL Technology, as well as the large quantities
of carbon bearing gas, liquid and solid materials available as feedstock,
there are economic incentives to develop and achieve significant market
penetration for successful Fischer-Tropsch technology. Several major
integrated oil companies, including Exxon Corporation, Royal Dutch/Shell
and Sasol Ltd., as well as several smaller companies, have developed or
are developing competing technologies. Each of these companies,
PAGE 17
especially the major oil companies, have significantly more financial and
other resources than Rentech to spend on developing, promoting and using
their technology. The U.S. Department of Energy has also sponsored a
number of research programs in Fischer-Tropsch technology, some of which
might potentially lower the cost of processes that compete with Rentech's
GTL Technology. There are no assurances that these companies, the
Department of Energy, or others will not develop technologies that will
be more commercially successful or better accepted in the industry than
Rentech's GTL Technology or that will render it obsolete.
--No Assurance of Industry Acceptance of Technology. As is typical
in the case of new and rapidly evolving technologies, including Rentech's
GTL Technology and the advanced technologies in which Rentech has an
interest, demand and industry acceptance is subject to a high level of
uncertainty. If Texaco or another licensee uses Rentech's GTL Technology
and fails to achieve success, other industry participants' perception of
Rentech's GTL Technology could be adversely affected. If the industry
fails to accept any of these technologies, especially Rentech's GTL
Technology, whether due to their novelty and continuous evolution, or for
other reasons, or acceptance develops more slowly than expected,
Rentech's business, operating results and financial condition will be
materially adversely affected. Any such event could reduce future
license fees or revenues from conversion plants, and could make it more
difficult or impossible for Rentech to successfully market its
technology. Likewise, were a major oil and gas company to either
successfully develop or adopt a Fischer-Tropsch technology competing with
the Rentech GTL Technology, the marketability of Rentech's GTL Technology
could be adversely affected. In addition, some companies may be
motivated to seek to prevent industry acceptance of gas-to-liquids
technology based on their belief that widespread adoption of such
technology might negatively impact the competitive position of their
companies without access to such technologies. Failure of Rentech's GTL
Technology to achieve industry acceptance could have a material adverse
effect on Rentech's business, operating results and financial condition.
--Operating Hazards of Fischer-Tropsch Plants. While the risks
related to use of Rentech's GTL Technology in conversion plants are low,
some plants may require oxygen producing systems to convert the feedstock
into synthesis gas, the first step for use of Rentech's GTL Technology.
The oxygen producing systems, if required, will involve risk of
accidents. Personal injuries and property damage may result. The
frequency and seriousness of accidents, injuries and damages will impact
the marketability of Rentech's GTL Technology, its licensees' operating
costs and insurability, and market acceptance of Rentech's GTL
Technology. Significant frequency or severity of such accidents could
have a material adverse effect on Rentech's business, operating results
and financial condition.
PAGE 18
--Dependence Upon Key Personnel. Rentech's success with its
technology and in implementing its business plan to develop advanced
technology businesses are both substantially dependent upon the
contributions of its executive officers and key employees. The
individuals include Dr. Charles B. Benham, Dr. Mark S. Bohn, and Dennis
L. Yakobson, each of whom have jointly and individually invented various
aspects of Rentech's GTL Technology. At this stage of the Company's
development, economic success of Rentech's GTL Technology depends upon
design of conversion plants and their startup to achieve optimal plant
operations. That effort and establishment of the Company's advanced
technology businesses both require knowledge, skills, and relationships
unique to the Company's key personnel. Moreover, to successfully compete
with its GTL Technology and advanced technologies, the Company will be
required to engage in continuous research and development regarding
processes, products, markets and costs. Loss of the services of the
executive officers or other key employees could have a material adverse
effect on Rentech's business, operating results and financial condition.
Rentech does not have key man life insurance.
--New Business Risks Associated With Entry into Advanced Technology
Business. The likelihood of success of Rentech's entry into new
businesses involving advanced technologies must be considered in view of
the problems, expenses, difficulties, complications and delays frequently
encountered with starting up a new business. Those factors
include the development of new technology and the marketing of new
products. The Company has no history of operations in these lines of
business upon which to evaluate its prospects for future operating or
financial success. Accordingly, success in these businesses is not
assured.
--Risk of Technological and Regulatory Change and Requirement for
New Products. The market for advanced technology products is
characterized by rapidly changing technology, new legislation and
regulations, and evolving industry standards. The introduction of
products embodying new technology, the adoption of new legislation or
regulations, or the emergence of new industry standards could render the
Company's products and future products, if any, obsolete and
unmarketable. The success and growth of the Company will depend, in
part, upon its ability to anticipate changes in technology, market needs,
law, regulations, and industry standards; to continue to attract, retain
and motivate qualified personnel; and to successfully develop and
introduce new and enhanced products on a timely basis. The Company will
need to devote a substantial amount of its efforts and capital to
research and development as well as to sales and marketing. While
Rentech now has adequate facilities and personnel for its continuing
research and development work, there are no assurances that Rentech will
be successful in addressing such risks.
PAGE 19
--Limitations on Protection of Intellectual Property. Rentech
relies on a combination of patent, trade secret, copyright and trademark
law, nondisclosure agreements and technical security measures to protect
its intellectual property rights in its various lines of business. The
success of Rentech may depend on its ability to establish, protect and
enforce intellectual property rights with respect to its patented
technologies and proprietary rights and to successfully defend against
any alleged infringement or related claims. Rentech's ability to protect
and enforce its intellectual property position involves complex legal,
scientific and factual questions and uncertainties, the successful
outcome of which is not assured.
--Foreign Operations. Rentech expects that licensees of its GTL
Technology will construct plants in foreign countries where the
licensee's conduct and profitability of operations are at risk. The
additional risks include rapid changes in political and economic
climates; changes in foreign and domestic taxation; lack of stable
systems of law; susceptibility to loss of protection of patent rights and
other intellectual property rights; expatriation laws adversely affecting
removal of funds; fluctuations of currency exchange rates; contract
rights; labor disputes; civil disturbances; war and other disruptions
affecting operations. International operations and investments may also
be negatively affected by laws and policies of the United States
affecting foreign trade, investment and taxation. Any of these events
could adversely impact Rentech's licensees and thereby adversely affect
Rentech's operating results and financial condition.
--No Expectation of Dividends on Common Stock. No dividends have
been paid on Rentech's common stock since inception. Rentech currently
intends to retain any earnings for the future operation and development
of its business and does not anticipate paying dividends in the
foreseeable future. Any future dividends may be restricted by the terms
of outstanding preferred stock and other financing arrangements then in
effect.
--Potential Reverse Stock Split. By vote of shareholders at their
1999 annual meeting, the board of directors was authorized until June 16,
2000 to effect, in its discretion, a reverse stock split of the
outstanding shares of Rentech's common stock on the basis of one share
for each five shares outstanding at the time of the potential reverse
stock split. If the board of directors considers the reverse stock split
to be desirable for shareholders and implements it, any increase in the
market price of the common stock resulting from the reverse stock split
may be proportionately less than the decrease in the number of shares
outstanding.
--Limited Trading Market. Rentech's common stock is traded on the
American Stock Exchange. There are no assurances that the market for the
PAGE 20
common stock will be sustained or provide liquidity for investors who
wish to sell, or that investors will be able to sell their common stock
at any price. Future trading prices of the common stock will depend upon
many factors including, among others, prevailing market conditions and
Rentech's operating results.
--Fluctuations in Quarterly and Annual Results. Rentech has in the
past, and expects in the future, to experience significant fluctuations
in quarterly and annual operating results caused by the unpredictability
of many factors. These variations may include differences in actual
results of operations from results expected by financial analysts and
investors, the demand for licenses of Rentech's GTL Technology, timing of
construction and completion of plants by licensees, success in operating
plants, receipt of license fees and engineering fees and royalties,
improvements or enhancements of gas-to-liquids technology by Rentech and
its competitors, changes in oil and gas market prices, the impact of
competition by other technologies and energy sources, and general
economic conditions. Rentech believes that period-to-period comparisons
of its results of operations may not necessarily be meaningful and should
not be relied upon as indications of future performance. Some or all of
these factors may cause Rentech's operating results in future fiscal
quarters or years to be below the expectations of public market analysts
and investors. In such event, the price of Rentech's common stock is
likely to be materially adversely affected.
--Deterrence of Tender Offers by Fair Price Provisions. Rentech's
Articles of Incorporation include provisions that may make it more
difficult for a third party to acquire the Company. These provisions
include grouping of the board of directors into three classes with
staggered terms; a requirement that directors may be removed without
cause only with the approval of the holders of 66-2/3% of the outstanding
voting power of the capital stock of the Company; and a requirement that
the holders of not less than 66-2/3% of the voting power of the
outstanding capital stock of the Company approve certain business
combinations of the Company with any holder of more than 10% of such
voting power or an affiliate of any such holder unless the transaction is
either approved by at least a majority of the uninterested and
unaffiliated members of the board of directors or unless certain minimum
price and procedural requirements are met. Rentech also has a
shareholder rights plan that authorizes issuance to existing shareholders
of substantial numbers of preferred share rights or shares of common
stock in the event a third party seeks to acquire control of a
substantial block of the Company's common stock. These provisions could
deter a third party from tendering for the purchase of some or all of
Rentech's outstanding securities and could have the effect of entrenching
management.
PAGE 21
--Year 2000. Rentech is faced with the Year 2000 Issue, which is
the result of computer programs that are written using two digits rather
than four to define the applicable year. Any computer programs that
affect Rentech's activities, including those of its subsidiaries, and
that have date-sensitive software, may recognize a date using "00" as the
year 1900, rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations that depend
upon such date-sensitive software or computer hardware. The potential
problems include, among others, a temporary inability to process
transactions, send invoices, transfer funds, or engage in similar normal
business activities. The problems caused by the Year 2000 Issue may be
exacerbated and cause widespread business disruption because of the
interdependence of computer and telecommunications systems in the United
States and throughout the world. Rentech will continue to assess the
compliance of its major customers, suppliers and vendors. Management
believes that third-party relationships upon which Rentech relies
represent the greatest risk with respect to the Year 2000 issue, because
Rentech cannot guarantee that third parties will be able to adequately
assess and address their Year 2000 compliance issues in a timely manner.
As a consequence, Rentech can give no assurances that issues related to
Year 2000 will not have a material adverse effect on future results of
operations or financial condition. Since the beginning of 2000, Rentech
did not have any interruptions of its business due to the Year 2000
issue. During the next few months, Rentech will continue to monitor its
operations and assess whether the Year 2000 Issue has an impact on
Rentech.
USE OF PROCEEDS
The common stock is being offered for the account of Selling
Shareholders, and the Company will not receive any proceeds from the
sale of common stock by them.
We expect to apply the net proceeds we have already received from
the sale of the common stock, stock options and stock purchase warrants
in the amount of $5,757,000, as shown in the following table.
PAGE 22
Use of
Purpose Net Proceeds
------- ------------
Further Development of Rentech's
GTL Technology $2,257,000
Investment in Projects to Use
Rentech's GTL Technology 1,000,000
Working Capital 2,500,000
----------
Total: $5,757,000
The foregoing information as to the use of the net offering
proceeds represents our best estimate based upon current conditions as to
how the net proceeds would be used. We expect to apply the proceeds in
the order in which they appear in the table. We reserve the right to
revise the application of the net proceeds. Any amounts not used for
these purposes will be used for working capital and general corporate
purposes.
SELLING SHAREHOLDERS
This prospectus may be used by the Selling Shareholders identified
in this section who may be entitled to reoffer and resale of our common
stock under circumstances requiring the use of a prospectus. No person
will be authorized to use this prospectus for an offer of common stock
unless we agree.
The Selling Shareholders have purchased common stock from us. They
may also have acquired from us either stock options or stock purchase
warrants which may be exercised to purchase from us additional shares of
our common stock. Some of the Selling Shareholders may be subject to
agreements with us that prohibit immediate sales of their common stock.
The common stock and options and warrants to purchase common stock
were issued by the Company in transactions that the Company reasonably
believes to be exempt from the registration requirements of the
Securities Act of 1933, as amended, to persons reasonably believed by the
Company to be "accredited investors" (as defined in Rule 501(a) of the
Securities Act of 1933, as amended). The common stock owned by the
Selling Shareholders and some of the shares of common stock underlying
their stock options and warrants are being offered by the Selling
Shareholders identified in the following table.
PAGE 23
Number of Shares
to be Beneficially Owned
Number of On Completion of the
Name of Number of Shares Shares That Offering
Selling Beneficially Owned May Be % of
Shareholder Record Indirect Offered Record Indirect Class
- ----------------- ------ -------- ---------- ------ -------- -----
A.C.E. Invest. Ptshp. 61,250 183,750(1) 245,000 0 0 0
Anschutz Investment Company 938,750 2,863,250(2) 3,802,000 0 0 0
Azure Energy Fund Inc. 1,758,337 1,958,337(3) 1,858,337(4) 879,169 979,169 3.05%
Bill Bromley 60,690 15,172(5) 20,229 40,441 15,172 *
C. David Callaham 1,927,360 440,003(5) 586,671 1,340,689 440,003 2.88%
George M. Callaham 202,300 50,575(5) 67,433 134,867 50,575 *
Chamonix Holdings
Enterprises Ltd. 200,000 0 100,000 100,000 0 *
Donald Christensen 535,000 0 60,000 475,000 0 *
Dresser Engineers &
Constructors, Inc. 3,400,000 0 1,019,832 2,380,168 0 3.76%
Excelsior Mining Fund, Inc. 83,333 83,333(3) 83,333(4) 0 83,333 *
Forest Oil Corp. 1,000,000 3,047,000(2) 4,047,000 0 0 0
Ernie Haire 280,168 0 280,168 0 0 *
Hoyt L. Hudspeth 50,000 0 50,000 0 0 0
Paul D. Jorgenson 381,964 42,500(5) 56,666 325,298 42,500 *
Lo Family Ltd. Ptshp. 800,000 150,000(5) 266,666 533,334 150,000 1.1%
Michael Moquette 83,333 83,333(3) 83,333(4) 41,667 41,666 *
DSN Enterprises Ltd. 50,000 480,000(6) 300,000 50,000 180,000 *
Satish B. Parekh, TTEE
Satish B. Parekh Ph.D.
Living Tr UA DTD 2/3/94 221,668 41,667(5) 55,556 116,112 41,667 *
Joseph J. Peters 50,000 0 50,000 0 0 0
Portland Fixtures Ltd. Partnership 166,667 41,667(5) 55,556 111,111 41,667 *
Ratya Energy Group, Ltd. 166,664 166,664(3) 166,664(4) 83,332 83,332 *
Ren Corporation 400,000 0 200,000 200,000 0 *
Robert F. Schroepfer 171,468 41,667(5) 55,556 115,912 41,667 *
Scott & Stephanie Schroepfer 83,332 20,833(5) 27,780 55,552 20,833 *
William Earl Somerville 55,000 125,000(7) 55,000 0 125,000 *
Tanglewood Intl Enterprises, Inc. 357,000 89,250(5) 119,000 238,000 89,250 *
K. Peter Thomas 60,000 15,000(5) 20,000 40,000 15,000 *
Arthur W. Tower III 27,000 186,000(8) 211,000 2,000 0 *
ZWL Irrrevocable Trust 83,340 20,833(5) 27,780 55,560 20,833 *
Mark S. Zimel 60,000 15,000(5) 20,000 40,000 15,000 *
Total: 13,990,560
<FN>
*Less than 1%.
(1) Includes options to purchase 183,750 shares: 122,500 at $1.25 per share expiring December 31, 2001, and 61,250
at $5.00 per share expiring December 31, 2004.
(2) Includes options to purchase 3,000,000 shares common stock: 2,000,000 at $1.25 per share expiring
December 31, 2001, and 1,000,000 at $5.00 per share expiring December 31, 2004.
(3) Warrants to purchase common stock at $2.64 per share expiring March 29, 2003.
(4) Half of these shares are currently outstanding, and half underlie outstanding purchase warrants.
(5) Warrants to purchase common stock at $1.20 per share expiring October 12, 2004.
(6) Options to purchase common stock: 100,000 at $0.575 per share, 100,000 at
$0.80 per share, 100,000 at $0.90 per share, and 180,000 at $1.25 per share.
(7) Options to purchase common stock: 100,000 shares at $0.75 expiring October
6, 2002, and 25,000 shares at $0.65 expiring July 25, 2004.
(8) Warrants to purchase common stock at $0.75 per share with no expiration date.
</FN>
PAGE 24
To the knowledge of the Company, none of the Selling Shareholders
nor any officers, directors or employees of a Selling Shareholder have
held any office, position or other material relationship with the
Company, its predecessors or affiliates during the past three years.
Each Selling Shareholder has represented that he or it purchased the
common stock for investment and with no present intention of distributing
or reselling it unless registered for resale. However, in recognition of
the fact that holders of restricted securities may wish to be legally
permitted to sell their common stock when they deem appropriate, we have
filed with the SEC a registration statement, of which this prospectus
forms a part, for use with the resale of the common stock from time to
time in the over-the-counter market or in privately negotiated
transactions. We have agreed to prepare and file amendments and
supplements to the registration statement and to use our best efforts to
obtain effectiveness of the registration statement. We have also agreed
to keep the registration statement effective until all the common stock
offered with use of this prospectus has been sold, until the common stock
is no longer, by reason of Rule 144 or Rule 144A adopted by the SEC or
any other rule of similar effect, required to be registered for sale by
the Selling Shareholders, or for a period of seven years, whichever
occurs first.
Certain of the Selling Shareholders, their associates and affiliates
may from time to time be customers of, engage in transactions with, or
perform services for us or our subsidiaries in the ordinary course of
business.
PLAN OF DISTRIBUTION
The common stock offered through use of this prospectus may be sold
from time to time directly by the Selling Shareholders to purchasers.
Alternatively, the Selling Shareholders may from time to time offer the
common stock to or through underwriters, broker/dealers or agents, who
may receive compensation in the form of underwriting discounts,
concessions or commissions from the Selling Shareholders or the
purchasers of common stock for whom they may act as agents. The Selling
Shareholders and any underwriters, broker/dealers or agents that
participate in the distribution of common stock may be deemed to be
"underwriters" within the meaning of the Securities Act, and any profit
on the sale of the common stock by them and any discounts, commissions,
concessions or other compensation received by any of them may be deemed
to be underwriting discounts and commissions under the Securities Act of
1933.
The common stock offered through use of this prospectus may be sold
from time to time in one or more transactions at fixed prices, at
PAGE 25
prevailing market prices at the time of sale, at varying prices
determined at the time of sale, or at negotiated prices. The sale of the
common stock may be effected in transactions (which may involve crosses
or block transactions) (i) on any national or international securities
exchange or quotation services on which the common stock may be listed or
quoted at the time of sale, (ii) in the over-the-counter market, (iii) in
transactions otherwise than on such exchanges or in the over-the-counter
market or (iv) through the writing of options. At the time a particular
offering of the common stock is made, a prospectus supplement, if
required, will be distributed which will set forth the aggregate amount
and type of common stock being offered and the terms of the offering,
including the name or names of any underwriters, broker/dealers of
agents, any discounts, commissions and other terms constituting
compensation from the Selling Shareholders and any discounts, commissions
or concessions allowed or reallowed or paid to broker/dealers. Selling
Shareholders may also sell their common stock pursuant to Rule 144 or
Rule 144A under the Securities Act of 1933 if the requirements for the
availability of such rules have been satisfied.
To comply with the securities laws of certain jurisdictions, if
applicable, the common stock will be offered or sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain jurisdictions the common stock may not be offered or
sold unless it has been registered or qualified for sale in those
jurisdictions or an exemption from registration or qualification is
available and satisfied.
The Selling Shareholders will be subject to applicable provisions
of the Securities Exchange Act of 1934 and the rules and regulations
thereunder. Those provisions may limit the timing of purchases and sales
of any of the common stock by the Selling Shareholders. These
limitations may affect the marketability of the common stock.
All expenses of the registration of the common stock will be paid by
the Company. This includes without limitation, SEC filing fees and
expenses in compliance with state securities or "blue sky" laws; but the
Selling Shareholders will pay all underwriting discounts and selling
commissions, if any. The Selling Shareholders will be indemnified by the
Company against certain civil liabilities, including certain liabilities
under the Securities Act of 1934, or will be entitled to contribution in
connection therewith.
DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK
The authorized capital stock of Rentech consists of 100,000,000
shares of common stock, $.01 par value per share, and 1,000,000 shares of
preferred stock, $10 par value per share. A quorum for purposes of
PAGE 26
meetings of common shareholders consists of a majority of the issued and
outstanding shares of common stock. Once a quorum is established, action
of a routine nature may be taken by a majority of the shares represented
in person or by proxy at the meeting. Most major corporate transactions
such as mergers, consolidations, sales of all or substantially all
assets, and certain amendments to the articles of incorporation require
approval by the holders of two-thirds of the issued and outstanding
shares of common stock entitled to vote. Rentech's board of directors is
authorized to issue shares of common stock and preferred stock without
approval of shareholders. Shares of preferred stock may be issued in one
or more series, the terms of which will be determined at the time of
issuance by the board of directors without any requirement for
shareholder approval. These rights may include voting rights,
preferences as to dividends, and upon liquidation, conversion and
redemption rights, and mandatory redemption provisions pursuant to
sinking funds or otherwise.
The Board of Directors has authority to issue additional shares of
common stock, warrants and options to purchase common stock, and
preferred shares convertible into shares of common stock. The Board of
Directors has recently issued such securities, including warrants and
options to purchase additional shares of common stock. See the section
called "New Developments." Exercise of the warrants and options now
issued and others that may be issued, and issuance of additional shares
of common stock or preferred stock convertible into common stock, would
reduce the percentage ownership held by those who purchase shares of
Rentech's common stock in this offering. That would also dilute the book
value of those purchasers and others who are then shareholders.
The Company's Articles of Incorporation contain several provisions
that may make a takeover of the Company by a third party more difficult.
These provisions include: (i) classification of its Board of Directors
into three classes as nearly equal in size as practicable, with the
members of only one class to be elected annually for a three-year term;
(ii) directors may be removed without cause only with the approval of the
holders of two-thirds of the outstanding voting power of all capital
stock of the Company; (iii) special meetings of shareholders may be
called only by the president, directors, or affirmative vote of 10% or
more of the voting power of the outstanding capital stock of the Company;
and (iv) approval by the holders of two-thirds of the voting power of
the outstanding capital stock of the Company is required for certain
business combinations of the Company with any holder of more than 10% of
such voting power or an affiliate of any such holder unless the
transaction is either approved by at least a majority of the uninterested
and unaffiliated members of the Company's board of directors or unless
certain minimum price and procedural requirements are met designed to
assure that all shareholders of the Company receive a fair price for
their shares.
PAGE 27
The Company also has a shareholder rights plan which authorizes
issuance to existing shareholders of substantial numbers of preferred
shares rights or shares of common stock in the event a third party seeks
to acquire control of a substantial block of the Company's common stock.
These provisions could deter an offer by a third party for the purchase
of some or all of the Company's outstanding securities and could have the
effect of entrenching management. Pursuant to the shareholder rights
plan, the Company amended its Articles of Incorporation to authorize the
issuance of rights to 500,000 shares of Series 1998-C Participating
Cumulative Preferred Stock. In the event that a person acquires 15% or
more of the common stock of the Company, the holders of common stock at
that time have the right to receive 1/100 of a share of Series
1998-C Participating Cumulative Preferred Stock for each shares of common
stock owned by such person. The holders of the preferred stock are
entitled to dividends in the event that the Company declares a dividend
or distribution on the common stock. The holders of the preferred stock
are entitled to vote on all matters submitted to a vote of the
stockholders of the Company.
Whenever dividends on the preferred stock are in arrears for six
quarterly dividends, the holders of such stock (voting as a class) have
the right to elect two directors of the Company until all cumulative
dividends have been paid in full.
The shares of common stock covered by this prospectus are fully paid
and nonassessable. Holders of common stock have no preemptive rights.
Each stockholder is entitled to one vote for each share of common stock
held of record by such stockholder. Shareholders have no right to
cumulate votes for election of directors. Upon liquidation of Rentech,
the assets then legally available for distribution to holders of the
common stock will be distributed ratably among those shareholders in
proportion to their stock holdings. Holders of common stock are entitled
to dividends when, as and if declared by the board of directors out of
funds legally available for dividends. While shares of Rentech's Series
1998-B Preferred Stock are outstanding, no dividends may be paid on the
common stock unless dividends on the those preferred shares have been
paid. No shares of common stock may be purchased or funds set aside for
that purpose by the Company except in amounts of less than $100,000 per
year.
LEGAL OPINION
Brega & Winters, P.C., 1700 Lincoln Street, Suite 2222, Denver,
Colorado 80203 has rendered an opinion as to the legality of the common
stock issued to the Selling Shareholders. A lawyer associated with Brega
& Winters P.C. beneficially owns 283,052 shares of the Company's common
stock.
PAGE 28
EXPERTS
The financial statements incorporated by reference in this
Prospectus have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth
in their report incorporated herein by reference, and are incorporated
herein in reliance upon such report given upon the authority of said firm
as experts in auditing and accounting.
PAGE 29
RENTECH, INC.
13,990,560 Shares
Common Stock
P R O S P E C T U S
Offered by Selling Shareholders
_______________, 2000
Prospective investors may rely only on the information contained in this
prospectus. Neither Rentech, Inc. nor any underwriter has authorized
anyone to provide any other information. This prospectus isn't an offer
to sell to---nor does it seek an offer to buy---these securities from any
person in any jurisdiction in which it is illegal to make an offer or
solicitation. The information here is correct only on the date of this
prospectus, regardless of the time of the delivery of this prospectus or
any sale of these securities.
No action is being taken in any jurisdiction outside the United States to
permit a public offering of the common stock or possession or
distribution of this prospectus. Persons who come into possession of
this prospectus in jurisdictions outside the United States must inform
themselves about and observe any restrictions on this offering and on the
distribution of this prospectus in that jurisdiction.
All dealers effecting transactions in the shares offered by this
prospectus---whether or not participating in the offering---may be
required to deliver a copy of this prospectus. Dealers may also be
required to deliver a copy of this prospectus when acting as underwriters
and for their unsold allotments or subscriptions, if any.
[2 columns]
PAGE 30
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Registration Fee - Securities and Exchange Commission $12,119.32
Legal Fees and Disbursements* 14,500.00
Accounting Fees and Disbursements* 13,200.00
Legal Fees and Expenses in Connection with Blue Sky Filings* 4,000.00
Miscellaneous* 600.00
----------
Total $44,419.32
==========
- --------------
<FN>
* Estimated.
</FN>
Item 15. Indemnification of Directors and Officers.
The only charter provision, bylaw, contract, arrangement or statute
under which any director, officer or controlling person of Registrant is
insured and indemnified in any manner as such is as follows:
(a) Registrant has the power under the Colorado Business
Corporation Act to indemnify any person who was or is a party or is
threatened to be made a party to any action, whether civil, criminal,
administrative or investigative, by reason of the fact that such person
is or was a director, officer, employee, fiduciary, or agent of
Registrant or was serving at its request in a similar capacity for
another entity, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by
him in connection therewith if he acted in good faith and in a manner he
reasonably believed to be in the best interest of the corporation and,
with respect to any criminal action or proceeding, had no reasonable
cause to believe his conduct was unlawful. In case of an action brought
by or in the right of Registrant such persons are similarly entitled to
indemnification if they acted in good faith and in a manner reasonably
believed to be in the best interests of Registrant but no indemnification
shall be made if such person was adjudged to be liable for negligence or
misconduct in the performance of his duty to Registrant unless and to the
extent the court in which such action or suits was brought determines
upon application that despite the adjudication of liability, in view of
all circumstances of the case, such person is fairly and reasonably
PAGE 31
entitled to indemnification. Such indemnification is not deemed
exclusive of any other rights to which those indemnified may be entitled
under the Articles of Incorporation, Bylaws, agreement, vote of
shareholders or disinterested directors, or otherwise.
(b) The Articles of Incorporation and Bylaws of Registrant
generally require indemnification of officers and directors to the
fullest extent allowed by law.
Item 16. Exhibits.
The following exhibits are filed as part of this Registration
Statement or incorporated in it by reference:
Exhibit
Number Document
------- --------
EX-3.(i).1 Restated and Amended Articles of Incorporation, dated January 4, 1991
(incorporated herein by reference from the exhibits to Amendment
No. 2 to Registrant's Form S-18 Registration Statement No. 33-37150-D
filed with the Securities and Exchange Commission on January 18, 1991).
EX-3.(i).2 Articles of Amendment dated April 5, 1991 to the Restated and Amended
Articles of Incorporation (incorporated herein by reference from the
exhibits to Registrant's Current Report on Form 8-K dated August 10, 1993
filed with the Securities and Exchange Commission).
EX-3.(i).3 Articles of Amendment dated January 26, 1998 to Articles of Incorporation
-Preferences, Limitations and Relative Rights of Convertible Stock, Series
1998-B of Rentech, Inc. (incorporated herein by reference from Exhibit
No. 3.(I).2 to Registrant's Form 10-KSB filed with the SEC on January 13,
1999).
EX-3.(i).4 Articles of Amendment dated December 4, 1998 to Articles of Incorporation
-Designation, Preferences and Rights of Series 1998-C Participating
Cumulative Preference Stock of Rentech, Inc. pertaining to its Shareholder
Rights Plan (incorporated herein by reference from Exhibit No. 3.(I).4 to
Registrant's Form 10-KSB filed with the Securities and Exchange Commission
on January 13, 1999).
EX-3.(ii) Bylaws dated January 19, 1999 (incorporated herein by reference from Exhibit
No. EX-3.(ii) to Registrant's Form 10-KSB filed with the Securities and
Exchange Commission on January 12, 2000).
EX-4.1 Shareholder Rights Plan dated November 10, 1998 (incorporated herein by
reference from the exhibits to Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 19, 1998).
EX-4.2 Form of Warrant issued to investors in the 1999 private placement of
securities (incorporated herein by reference from Exhibit No. 4.2 to
Registrant's Form 10-KSB filed with the Securities and Exchange Commission
on January 12, 2000).
PAGE 32
EX-4.3 Form of Registration Rights Agreement issued to investors in the 1999
private placement of securities (incorporated herein by reference from
Exhibit No. 4.3 to Registrant's Form 10-KSB filed with the Securities and
Exchange Commission on January 12, 2000).
EX-5 Opinion of Brega & Winters, P.C.
EX-23.1 Consent of Independent Certified Public Accountants.
EX-23.2 Consent of Brega & Winters P.C. (included in Exhibit 5).
EX-24 Power of Attorney.
Item 17. Undertakings.
I. (a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration
Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.
PAGE 33
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by a director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
of whether such indemnification by it is against public policy as
expressed in the Act and shall be governed by the final adjudication of
such issue.
PAGE 34
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, State of Colorado, on
the 25th day of May, 2000.
RENTECH, INC.
(signature)
By: ---------------------------------
Dennis L. Yakobson, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
(signature)
---------------------- President, Chief Executive May 25, 2000
Dennis L. Yakobson Officer and Director
(signature)
---------------------- Vice President, Chief May 25, 2000
Ronald C. Butz Operating Officer,
Secretary and Director
(signature)
---------------------- Director May 25, 2000
John J. Ball
(signature)
---------------------- Director May 25, 2000
John P. Diesel
(signature)
---------------------- Vice President - Finance, May 25, 2000
James P. Samuels Chief Financial Officer
(signature)
---------------------- Director May 25, 2000
Douglas L. Sheeran
(signature)
---------------------- Director May 25, 2000
Erich W. Tiepel
PAGE 35
EXHIBIT INDEX
Exhibit
Number Document
EX-3.(i).1 Restated and Amended Articles of Incorporation, dated January 4, 1991
(incorporated herein by reference from the exhibits to Amendment
No. 2 to Registrant's Form S-18 Registration Statement No. 33-37150-D
filed with the Securities and Exchange Commission on January 18, 1991).
EX-3.(i).2 Articles of Amendment dated April 5, 1991 to the Restated and Amended
Articles of Incorporation (incorporated herein by reference from the
exhibits to Registrant's Current Report on Form 8-K dated August 10,
1993 filed with the Securities and Exchange Commission).
EX-3.(i).3 Articles of Amendment dated January 26, 1998 to Articles of Incorporation
-Preferences, Limitations and Relative Rights of Convertible Stock, Series
1998-B of Rentech, Inc. (incorporated herein by reference from Exhibit
No. 3.(I).2 to Registrant's Form 10-KSB filed with the SEC on January 13,
1999).
EX-3.(i).4 Articles of Amendment dated December 4, 1998 to Articles of Incorporation
-Designation, Preferences and Rights of Series 1998-C Participating
Cumulative Preference Stock of Rentech, Inc. pertaining to its Shareholder
Rights Plan (incorporated herein by reference from Exhibit No. 3.(I).4 to
Registrant's Form 10-KSB filed with the Securities and Exchange Commission
on January 13, 1999).
EX-3.(ii) Bylaws dated January 19, 1999 (incorporated herein by reference from
Exhibit No. EX-3.(ii) to Registrant's Form 10-KSB filed with the Securities
and Exchange Commission on January 12, 2000).
EX-4.1 Shareholder Rights Plan dated November 10, 1998 (incorporated herein by
reference from the exhibits to Current Report on Form 8-K filed with the
Securities and Exchange Commission on November 19, 1998).
EX-4.2 Form of Warrant issued to investors in the 1999 private placement of
securities (incorporated herein by reference from Exhibit No. 4.2 to
Registrant's Form 10-KSB filed with the Securities and Exchange Commission
on January 12, 2000).
EX-4.3 Form of Registration Rights Agreement issued to investors in the 1999
private placement of securities (incorporated herein by reference from
Exhibit No. 4.3 to Registrant's Form 10-KSB filed with the Securities
and Exchange Commission on January 12, 2000).
EX-5 Opinion of Brega & Winters, P.C.
EX-23.1 Consent of Independent Certified Public Accountants.
EX-23.2 Consent of Brega & Winters P.C. (included in Exhibit 5).
EX-24 Power of Attorney.