Enviva announces plans to become C-Corp, signs new contracts

By Erin Voegele | October 18, 2021

Enviva Partners LP on Oct. 15 announced plans to convert its organizational structure from a master limited partnership (MLP) to a C-Corp under the name of Enviva Inc. The conversion is expected to take effect as of Dec. 31.

As part of the announcement, Enviva Partners said it has reached a definitive agreement with Enviva Holdings LP, its general partner, under which it acquired all the of the ownership interests in Enviva Holdings and eliminated its incentive distribution rights (IDRs) in exchange for 16 million Enviva Partners common units, representing total consideration of approximately $870 million.

“We are very excited about the highly accretive benefits that Enviva’s Simplification Transaction and Conversion brings to our unitholders,” said John Keppler, Chairman and Chief Executive Officer. “By eliminating the IDRs, significantly reducing the cost of upcoming investments in fully contracted assets, and eliminating the barriers to institutional ownership that can result from a partnership’s tax structure, we believe we can dramatically reduce Enviva’s cost of capital and unlock significant value while simultaneously creating a sustainable structure for long-term value creation.”

“We operate at the epicenter of the international energy transition and global efforts to decarbonize and reach ‘net zero’ by 2050. As we continue to grow our balance sheet to meet exponentially increasing worldwide demand for our product, our new structure should enable investors across the globe to participate in the step-change accretion we have ahead of us,” Keppler continued. “We believe the strength and stability of our fully contracted business will support our steadfast commitment to consistently and sustainably delivering superior returns to shareholders.”

Enviva also announced the signing of new take-or-pay contracts, including a new five-year take-or-pay off-take contract to supply Drax Group plc with 200,000 metric tons per year of wood pellets. Deliveries under the new Drax contract are expected to begin in 2022. A new 190,000 metric ton per year take-or-pay off-take contract has also been signed with a large, creditworthy Japanese trading house with deliveries commencing in 2024, according to Enviva.

A full copy of Enviva’s announcement is available on the company’s website