U.S. wood pellet producer Enviva Inc. on March 12 filed a voluntary Chapter 11 bankruptcy petition with the U.S. Bankruptcy Court for the Eastern District of Virginia in hopes of restructuring its approximately $1 billion in debt.&nbsp;Enviva, currently the world’s largest producer of wood pellets, was founded in 2004 and conducted an initial public offering (IPO) in 2015. The company has implemented ambitious growth plans in recent years, and currently has 10 operational wood pellet plants spanning areas in North Carolina, Mississippi, Florida, South Carolina, Virginia and Georgia with a combined capacity of approximately 5 million metric tons. In addition, a 1.1 million metric ton per year pellet plant is under construction in Epes, Alabama, with a 1.1 million metric ton per year facility proposed for development in Bond Mississippi. Enviva also operates six deep water ports in the U.S. South.&nbsp;Enviva began facing financial troubles last year, following some bad bets on future pellet prices. In its third quarter 2023 financial report, released on Nov. 9, 2023, Enviva described how sales contracts it entered into in late 2022 “have had a significant negative impact on the company’s profitability, cash flows, and liquidity due to the negative current spread between the sale and purchase prices of the agreements and the anticipated loss on resale of those volumes within an unfavorable pricing environment in the wood pellet spot market.” Absent a significant and near-term increase in wood pellet market pricing, the company said it expected that 2022 transactions to continue to have a negative impact on profitability, cash flows and liquidity through 2025, ultimately causing it to be in breach of certain covenants under its senior secured credit facility.&nbsp;Enviva in January received notice from the New York Stock Exchange that the company’s listing price was no longer in compliance with NYSE continued listing criteria, which requires listed companies to maintain an average closing share price of at least $1 over a consecutive 30-trading-day period. Enviva has six months to regain compliance before its shares are delisted on the NYSE. The company’s stock prices were trading at more than $50 per share in December 2022, but fell to less than $9 per share in May 2023. Stock prices hovered near $1 per share in December 2023 before dipping even lower into 2024 and are trading at approximately 42 cents today. The company is now taking formal steps to improve its financial position.&nbsp;In its March 12 announcement, Enviva announced it has entered into two restructuring support agreements (RSAs), including one RSA with an ad hoc group of holders representing approximately 72% of its senior secured credit facility, approximately 95% of its 2026 senior notes, approximately 78% of bonds related to the Epes plant and approximately 45% of bonds related to its proposed Bond facility; and one RSA with certain holders representing more than 92% of bonds related to the Bond project.&nbsp;According to Enviva, the RSAs have broad support across the company’s capital structure and are designed to support an expedited restructuring to reduce the company’s debt by approximately $1 billion as well as improve profitability, strengthen liquidity, and better position the business for long-term success.&nbsp;To implement this pre-arranged restructuring, Enviva and approximately 20 of its subsidiaries have commenced voluntary Chapter 11 proceedings. Enviva said it has also secured commitments for $500 million in debtor-in-possession (DIP) financing and other financing accommodations from the ad hoc group, a portion of which will be allocated by the company to eligible stockholders in accordance with a syndication process that is subject to court approval. The DIP facility is expected to provide, subject to court approval, sufficient liquidity to support continued operations across Enviva’s business throughout the restructuring process, as well as help fund the completion of the Epes plant.&nbsp;“These agreements with our lenders and noteholders represent a significant milestone in the ongoing process to transform our business, as we focus on improving profitability, reducing costs, enhancing asset productivity, and optimizing our capital structure,” said Glenn Nunziata, interim CEO and chief financial officer of Enviva. “We look forward to emerging from this process as a stronger company with a solid financial foundation and better positioned to be a leader in the future growth of the wood-based biomass industry. We appreciate the support of our lenders, our vendors, and our customers, and the tremendous efforts of our entire team as we continue to execute our transformation plan.”The restructuring is targeted to be complete during the fourth quarter of 2024. Throughout the process, Enviva said it plans to continue construction of the Epes plant, with an in-service date expected to be during the first half of 2025. Enviva also said it plans to pause development of the proposed Bond plant and intends to consider resuming development of the facility once the company emerges from its in-court restructuring process, depending on the level of customer contracting.&nbsp;Japan-based Sumitomo Corp., which procures wood pellets from Enviva for Japanese customers, issued a statement in response to the Chapter 11 bankruptcy filing. “Based on the procurement contract for woody biomass from Enviva, [Sumitomo Corp.] holds several long-term supply contracts for Japanese customers,” the company said. “We will closely monitor the progress of Enviva's procedures and discuss with Japanese customers how to treat with procurement from Enviva.”The U.S. Industrial Pellet Association said it doesn’t comment on the business operations of individual members but stressed the U.S. wood pellet industry maintains a strong position as demonstrated by record exports in 2023 and increasing demand across global markets and diverse new applications.&nbsp;“The need for climate solutions, especially carbon removal and in hard-to-abate industrial and transportation sectors, has never been greater,” USIPA said. “As the world’s largest exporter of sustainably sourced wood pellets, our industry is poised for continued growth and will play an essential role in delivering these technologies to support international energy security and help achieve global climate goals.”&nbsp;

2024-03-13 - Enviva files for Chapter 11 bankruptcy, aims to complete restructuring by Q4 (Biomass Magazine)

2023/05/EnvivaLogo_16841981120178_largethumb.jpg

2023/05/EnvivaLogo_16841981120178_thumb.jpg

2023/05/EnvivaLogo_16841981120178.jpg

U.S. wood pellet producer Enviva Inc. on March 12 filed a voluntary Chapter 11 bankruptcy petition with the U.S. Bankruptcy Court for the Eastern District of Virginia in hopes of restructuring its approximately $1 billion in debt. 

Enviva files for Chapter 11 bankruptcy, aims to complete restructuring by Q4

Related Stories

Neste extends relationship with World Fuel Services ensuring the availability of SAF at over 100 airports in Europe

Gevo completes debt refinancing transaction to simplify its debt structure with new consolidated facility

EIA reduces forecast for renewable diesel production, maintains outlook for SAF

Novilla RNG achieves successful operations of its Vermont-based Bellevue RNG project

Anaergia, Eni and CREvolution unveil breakthrough platform to scale demand for biodiesel and SAF

Upcoming Events

2026 International Biomass Conference & Expo

Enviva files for Chapter 11 bankruptcy, aims to complete restructuring by Q4.css-7jxktu{position:absolute;bottom:0px;left:0px;right:0px;height:3px;border-radius:3px;background-color:var(--chakra-colors-brandBlack);}