Enviva, which has a plant in Garysburg, has announced that it will commence voluntary Chapter 11 proceedings in the United State Bankruptcy Court for the Eastern District of Virginia.
In a letter to vendors the company said it intends to continue manufacturing and delivering wood pellets to its customers worldwide, “and our relationship with you is expected to remain important.”
The company in the letter said it expects to pay its vendors for all authorized goods received and services rendered after the filing date.
“We have secured a commitment for $500 million of debtor-in-possession financing to support our continued operations,” the letter says. “Subject to court approval, this financing is expected to be sufficient to fund our day-to-day operations and meet our go-forward obligations to you.”
The company said Tuesday it has entered into two Restructuring Support Agreements — one RSA with an ad hoc group of holders representing approximately 72 percent of its senior secured credit facility, approximately 95 percent of its 2026 senior notes, approximately 78 percent of bonds related to its Epes, Alabama plant currently under construction and approximately 45 percent of bonds related to its greenfield project near Bond, Mississippi. A second RSA deals with certain holders representing more than 92 percent of bonds related to the Mississippi project.
The company said 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 “as the world’s largest producer of industrial wood pellets.”
A portion of the $500 million in debtor-in-possession financing 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 Epes.”
Glenn Nunziata, interim chief executive officer and chief financial officer said, “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.”
He said, “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 completed during the fourth quarter of 2024, and throughout the process, Enviva plans to continue constructing its Epes plant, with an in-service date expected to be during the first half of 2025.
The company announced plans to pause development of the Mississippi project and will revisit it once it emerges from the restructuring process.
The terms of the RSA with the Ad Hoc Group provide for existing equity holders to receive 5 percent of the common equity of the reorganized company at exit from Chapter 11 proceedings and warrants to purchase an additional 5 percent of the reorganized equity, both subject to dilution from shares issued in connection with, among other sources, a contemplated equity rights offering, equity participation election rights for creditors under the DIP Facility, and a management incentive plan, in each case, subject to Court approval.
Enviva has been in contact with the New York Stock Exchange and anticipates the continued listing of its common stock on the NYSE throughout the restructuring process so long as the company continues to meet the minimum continued listing standards set forth by the NYSE.
