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Source: Rentech Nitrogen news release

Rentech Nitrogen Partners, L.P. (NYSE: RNF) announced today that it has entered into a $50 million revolving credit facility with GE Capital, Corporate Finance.

The partnership plans to use the credit facility to fund growth projects. The facility will also be available, if needed, for general partnership purposes.

This credit facility replaces the $35 million working capital facility established in April 2013, providing more flexibility at lower cost to the partnership. The new facility has less restrictive financial covenants than the previous facility, with no financial covenants unless the outstanding balance exceeds $35 million or there is otherwise a default or an event of default continuing under the facility.

The new facility does not have a requirement to repay periodically the entire outstanding balance, allowing the partnership to use borrowings under the facility to fund capital projects.

The credit facility is secured by substantially all of the assets of the partnership and is guaranteed by its operating subsidiaries. The interest rate on outstanding balances is LIBOR plus 325 basis points, with no LIBOR floor, to be paid quarterly.

An unused facility fee of 50 basis points will be paid quarterly. The new facility requires no amortization of principal, and may be drawn upon until it matures on July 22, 2019.

The credit facility is currently undrawn. During calendar year 2014, the partnership expects to have an outstanding balance of $10 to $15 million to fund the following growth projects:

Nitric acid plant upgrade: This previously announced project would increase nitric acid production and significantly reduce power consumption at the East Dubuque facility. The partnership is targeting an increase of 8%, or 30 tons per day, in nitric acid production. This would allow the facility to upgrade more ammonia to produce an additional 14,700 tons of UAN annually. The partnership expects this project to cost approximately $7 million, with an estimated return of greater than 30%. The partnership expects completion of the project in the first quarter of 2015.

Fourth Urea CO2 compressor: The East Dubuque facility is installing a fourth CO2 compressor in the urea plant to improve reliability and yield a 5% increase in urea production rates. This is expected to bring total urea production to approximately 484 tons per day. The partnership plans to upgrade the additional urea tons to UAN and diesel exhaust fluid (DEF). The total project cost is expected to be approximately $4 million, with an estimated return greater than 20%. Project completion is scheduled for the end of this year.

Third DEF storage tank: The East Dubuque facility is installing a third DEF tank to provide flexibility to store additional urea in response to growing demand for liquid urea and DEF. The project is expected to cost approximately $0.4 million, with an estimated return of approximately 20%. The partnership expects to commission the tank in the fourth quarter of this year.

Hydrogen recovery upgrade: This project at the East Dubuque facility will increase the amount of hydrogen recovered from the purge gas, improving the efficiency of the ammonia plant synthesis loop. The total estimated cost of the project is $0.4 million, with a projected return of greater than 150%. The project is expected to be completed at the end of this month.

In its ongoing efforts to increase cash distributions, the partnership will continue to evaluate potential projects at its facilities. Additional borrowings under the credit facility could fund these projects should they meet the partnership's investment return hurdles and receive approval of the board.

The partnership expects to distribute less than all of the cash available for distribution in the second quarter of 2014, in order to replenish working capital reserves that were diminished by $20 million of negative cash available for distribution in the fourth quarter of 2013. Rentech Nitrogen does not expect to use borrowings under the new credit facility to replenish those working capital reserves.

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