Rentech Inc. spent much of the last decade trying to develop exotic biofuels. Now its staking its future on that most basic of fuels: wood.

The Westwood company recently bought a Georgia company that processes wood chips and sells the resulting fiber for use as pulp. But the acquisition gives Rentech a joint venture with a producer of wood pellets that are used as fuel for power plants.

The deal serves a dual purpose. It gives Rentech a much needed revenue stream from the fiber sales. Along with other recent acquisitions, it positions the company for future sales of wood pellets.

After announcing earlier this year that it was closing down its biofuels research unit due to competition from cheap natural gas and a drop in federal funding, Rentech this month closed a $112 million deal to buy Fulghum Fibres Inc. of Augusta, Ga., an acquisition that includes the joint venture. The company has been absorbed into Rentech.

“This deal gives us a new business line with a stable revenue stream and also serves as a platform to launch into the growing and complementary global wood pellet industry,” Chief Executive Hunt Ramsbottom told the Business Journal last week.

Investors reacted by sending Rentech shares up 17 percent May 2 to close at $2.42 a share, though since then shares have slid back to close at $2.19 on May 9. The handful of analysts who follow the company issued reports with “buy” recommendations.

One of those analysts, Matthew Farwell in the New York office of L.A. firm Imperial Capital LLC, said in his research note that the deal would offer stable cash flow and add to earnings per share.

Ramsbottom said the new business line could eventually be converted into a master limited partnership, a common tool in the energy sector used to return more profits to shareholders. The prospect of the master limited partnership was one of the main drivers of the stock uptick.

For Rentech, which moved its headquarters to Westwood from Colorado seven years ago, securing a stable cash flow is crucial. After the company shed its biofuels unit, more than 80 percent of its revenue comes from its stake in a nitrogen fertilizer business, Rentech Nitrogen. That business is linked to the start of growing seasons for various crops, so its revenue is cyclical.

The deal for the Georgia wood business, which includes debt, gives Rentech access to a stable business generating $10 million in annual operating income. Fulghum processes about 15 million metric tons of wood and bark annually into wood chips and has long-term contracts with major paper and pulp producers Georgia-Pacific LLC of Atlanta; International Paper of Memphis, Tenn.; and Weyerhaeuser Co. of Federal Way, Wash.

“The stability of margins we expect here will reduce our exposure to agricultural cycles inherent in Rentech Nitrogen’s business,” Ramsbottom said in the press release announcing the deal.

Along with the wood chip business, Fulghum has been in a joint venture with Graanul Invest of Tallinn, Estonia, a major producer of wood pellets made from compacted sawdust and other wood byproducts. Wood pellets are used as fuel for power plants, especially in Europe, where power plants face government mandates to wean themselves from coal. Also, natural gas prices are relatively high in Europe. The joint venture’s goal is to bring more pellet production to the North American market.

In a separate series of transactions completed in recent months and announced last week, Rentech has acquired two idled Canadian wood-processing factories that it intends to convert to wood pellet production. Rentech also announced it has signed contracts to supply 400 metric tons of wood pellets annually to Drax Power Ltd., – which operates the United Kingdom’s largest coal-fired power plant – and 45 metric tons of pellets annually to Ottawa Power Generation in Ottawa, Ontario.

Deliveries under those contracts are scheduled to start late next year, once the two idled plants are converted to pellet production.

Ramsbottom said that for now, the focus of the wood pellet business would be on customers in Canada, Europe and other global markets, but not here.

“Right now, natural gas prices are too low to make any significant inroads in the United States with wood pellets,” he said.

Ramsbottom noted it wasn’t the first time that the company went into a new business line that was outside its expertise in alternative fuels.

“We entered the fertilizer business through an acquisition five years ago,” he said. “That’s what we do: We acquire companies and their talent and use that talent to grow the business.”