-- Restructuring Plan Expected to Reduce Debt
by Approximately $1.0 Billion, Improve Profitability, and Better
Position the Business for Long-Term Success --
-- Company Commences Voluntary Chapter 11
Proceedings to Implement Pre-Arranged Restructuring Plan --
-- Company Secures Commitment for $500 Million
in Debtor-in-Possession Financing --
-- Enviva Continues Operations while Advancing
its Transformation Plan --
Enviva Inc. (NYSE: EVA) (“Enviva” or the “Company”), a leading
producer of sustainably sourced wood-based biomass, today announced
that it has entered into two Restructuring Support Agreements
(“RSAs”): one RSA with an ad hoc group of holders (the “Ad Hoc
Group”) representing approximately 72% of its senior secured credit
facility, approximately 95% of its 2026 senior notes, approximately
78% of bonds related to its Epes, Alabama plant currently under
construction (“Epes”), and approximately 45% of bonds related to
its greenfield project near Bond, Mississippi (“Bond”), and a
second RSA with certain holders representing more than 92% of bonds
related to the Bond project.
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 $1.0 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.
To implement this pre-arranged restructuring, Enviva and certain
of its subsidiaries have commenced voluntary Chapter 11 proceedings
in the U.S. Bankruptcy Court for the Eastern District of Virginia
(the “Court”). The Company has also secured commitments for $500
million in debtor-in-possession financing (“DIP Facility”) 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 Epes.
Glenn Nunziata, Interim Chief Executive Officer and Chief
Financial Officer commented, “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. 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 Company is filing with the Court several customary
“first-day” motions. These motions, which Enviva expects to be
approved in short order, are expected to help facilitate a smooth
transition into Chapter 11. Enviva expects to continue to pay
suppliers in the ordinary course for authorized goods received and
services provided after the filing.
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 also announced plans to pause development of Bond.
The Company intends to revisit restarting Bond, depending on the
level of customer contracting, once it emerges from its in-court
restructuring process.
The terms of the RSA with the Ad Hoc Group provide for existing
equity holders to receive (i) 5% of the common equity of the
reorganized company at exit from Chapter 11 proceedings and (ii)
warrants to purchase an additional 5% 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 (the
“NYSE”) 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.
Additional information about Enviva’s restructuring process and
proceedings is available at www.kccllc.net/Enviva. Stakeholders
with questions may call the Company’s Claims Agent, KCC, at (888)
249-2695 or (310) 751-2601 if calling from outside the U.S. or
Canada, or email envivainfo@kccllc.com.
Vinson & Elkins LLP is serving as legal counsel; Lazard is
serving as investment banker; and Alvarez & Marsal is serving
as financial advisor to Enviva. Davis Polk & Wardwell LLP is
serving as legal advisor and Evercore Group L.L.C. is serving as
financial advisor to the Ad Hoc Group.
About Enviva
Enviva Inc. (NYSE: EVA) is the world’s largest producer of
industrial wood pellets, a renewable and sustainable energy source
produced by aggregating a natural resource, wood fiber, and
processing it into a transportable form, wood pellets. Enviva owns
and operates ten plants with annual production of approximately 5.0
million metric tons in Virginia, North Carolina, South Carolina,
Georgia, Florida, and Mississippi, and is constructing its 11th
plant in Epes, Alabama. Enviva sells most of its wood pellets
through long-term, take-or-pay off-take contracts with customers
located primarily in the United Kingdom, the European Union, and
Japan, helping to accelerate the energy transition away from
conventional energy sources and reduce greenhouse gas emissions on
a lifecycle basis in hard-to-abate sectors like steel, cement,
lime, chemicals, and aviation. Enviva exports its wood pellets to
global markets through its deep-water marine terminals at the Port
of Chesapeake, Virginia, the Port of Wilmington, North Carolina,
and the Port of Pascagoula, Mississippi, and from third-party
deep-water marine terminals in Savannah, Georgia, Mobile, Alabama,
and Panama City, Florida.
To learn more about Enviva, please visit our website at
www.envivabiomass.com. Follow Enviva on social media @Enviva.
Cautionary Note Concerning Forward Looking Statements
The information included herein and in any oral statements made
in connection herewith include “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of present or
historical fact included herein are forward-looking statements.
When used herein, including any oral statements made in connection
herewith, the words “could,” “should,” “will,” “may,” “believe,”
“anticipate,” “intend,” “estimate,” “expect,” “project,” the
negative of such terms, and other similar expressions are intended
to identify forward-looking statements, although not all
forward-looking statements contain such identifying words. These
forward-looking statements are based on management’s current
expectations and assumptions about future events and are based on
currently available information as to the outcome and timing of
future events. Except as otherwise required by applicable law,
Enviva disclaims any duty to revise or update any forward-looking
statements, all of which are expressly qualified by the statements
in this section, to reflect events or circumstances after the date
hereof. Enviva cautions you that these forward-looking statements
are subject to risks and uncertainties, most of which are difficult
to predict and many of which are beyond the control of Enviva.
These risks include, but are not limited to, risks and
uncertainties regarding: our ability to successfully complete a
restructuring under Chapter 11; potential adverse effects of the
Chapter 11 proceedings on our liquidity and results of operations
(including the availability of operating capital during the
pendency of Chapter 11 proceedings); our ability to obtain timely
approval by the Court with respect to the motions filed in the
Chapter 11 proceedings; objections to our restructuring process,
debtor-in-possession financing, or other pleadings filed that could
protract the Chapter 11 proceedings; employee attrition and our
ability to retain senior management and other key personnel due to
distractions and uncertainties associated with the Chapter 11
proceedings, including our ability to provide adequate compensation
and benefits during the Chapter 11 cases; our ability to maintain
relationships with vendors, customers, employees, and other third
parties and regulatory authorities as a result of the Chapter 11
proceedings; the debtor-in-possession financing and other financing
arrangements; the effects of the bankruptcy petitions on the
Company and on the interests of various constituents, including our
stockholders; the length of time that we will operate under Chapter
11 protection and the continued availability of operating capital
during the pendency of the proceedings; risks associated with third
party motions in the Chapter 11 proceedings, which may interfere
with our ability to consummate a restructuring; our consummation of
a restructuring; increased administrative and legal costs related
to the Chapter 11 process and other litigation and inherent risks
involved in a bankruptcy process; the Company’s ability to continue
funding operations through the Chapter 11 bankruptcy process; our
ability to continue as a going concern; our ability to successfully
execute cost-reduction and productivity initiatives on the
anticipated timeline or at all; the outcome and timing of our
comprehensive review; the volume and quality of products that we
are able to produce or source and sell, which could be adversely
affected by, among other things, operating or technical
difficulties at our wood pellet production plants or deep-water
marine terminals; the prices at which we are able to sell our
products, including changes in spot prices; our ability to
capitalize on higher spot prices and contract flexibility in the
future, which is subject to fluctuations in pricing and demand;
impairment of goodwill, intangible assets, and other long-lived
assets; failure of our customers, vendors, and shipping partners to
pay or perform their contractual obligations to us; our inability
to successfully execute our project development, capacity
expansion, and new facility construction activities on time and
within budget; the creditworthiness of our contract counterparties;
the amount of low-cost wood fiber that we are able to procure and
process, which could be adversely affected by, among other things,
disruptions in supply or operating or financial difficulties
suffered by our suppliers; changes in the price and availability of
natural gas, coal, diesel, oil, gasoline, or other sources of
energy; changes in prevailing domestic and global economic,
political, and market conditions, including the imposition of
tariffs or trade or other economic sanctions, political instability
or armed conflict, rising inflation levels and government efforts
to reduce inflation, or a prolonged recession; inclement or
hazardous environmental conditions, including extreme
precipitation, temperatures, and flooding; fires, explosions, or
other accidents; changes in domestic and foreign laws and
regulations (or the interpretation thereof) related to renewable or
low-carbon energy, the forestry products industry, the
international shipping industry, or power, heat, or combined heat
and power generators; changes in domestic and foreign tax laws and
regulations affecting the taxation of our business and investors;
changes in the regulatory treatment of biomass in core and emerging
markets; our inability to acquire or maintain necessary permits or
rights for our production, transportation, or terminaling
operations; changes in the price and availability of
transportation; changes in foreign currency exchange or interest
rates and the failure of our hedging arrangements to effectively
reduce our exposure to related risks; risks related to our
indebtedness, including the levels and maturity date of such
indebtedness; our failure to maintain effective quality control
systems at our wood pellet production plants and deep-water marine
terminals, which could lead to the rejection of our products by our
customers; changes in the quality specifications for our products
required by our customers; labor disputes, unionization, or similar
collective actions; our inability to hire, train, or retain
qualified personnel to manage and operate our business; the
possibility of cyber and malware attacks; our inability to borrow
funds and access capital markets; viral contagions or pandemic
diseases; potential liability resulting from pending or future
litigation, investigations, or claims; changes to our leadership
and management team; and governmental actions and actions by other
third parties that are beyond our control. Certain additional
risks, uncertainties, and other factors are described in greater
detail in Enviva’s filings with the SEC, including the detailed
factors discussed under the heading “Risk Factors” in Enviva’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2022, as supplemented in the Company’s Quarterly Reports on Form
10-Q for the fiscal quarters ended March 31, June 30, and September
30, 2023.
Should one or more of the risks or uncertainties described
herein and in any oral statements made in connection therewith
occur, or should underlying assumptions prove incorrect, actual
results and plans could different materially from those expressed
in any forward-looking statements. Additional information
concerning these and other factors that may impact Enviva’s
expectations and projections can be found in Enviva’s periodic
filings with the SEC. Enviva’s SEC filings are available publicly
on the SEC’s website at www.sec.gov.
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