US wood pellet producer Enviva said today it is voluntarily filing for Chapter 11 bankruptcy protection and announced a restructuring plan.
The company expects to reduce its debt by $1bn and strengthen liquidity to allow it to continue operating.
Enviva has entered into two Restructuring Support Agreements (RSAs) which have "broad support across the company's capital structure" and are designed to "support an expedited restructuring" to reduce the firm's debt as well as improve profitability and "better position the business for long-term success", it said.
The firm said the RSAs were supported by two groups of stakeholders; an "ad-hoc group" representing 72pc of its senior secured credit facility, around 78pc of bonds related to the 1.1mn t/yr Epes wood pellet production plant currently under construction, and around 45% of bonds related to its 1.1mn t/yr Bond plant. And the second RSA was reached with holders representing more than 92pc of bonds linked to the Bond facility, whose development Enviva said on 13 March it was pausing and intended to revisiting after its in-court restructuring process, "depending on the level of customer contracting".
Enviva has commenced voluntary Chapter 11 proceedings in the US Bankruptcy Court for the Eastern District of Virginia to implement this pre-arranged restructuring. It has also secured commitments for $500mn in debtor-in-possession (DIP) financing from the Ad Hoc Group.
Pending court approval, the DIP facility is expected to provide enough liquidity to support the firm's continued operations across the business throughout the restructuring process and help fund the completion of the Epes plant, Enviva said. It expects to continue to pay suppliers for authorised goods received and services provided after the filing, it said.
The firm aims to complete the restructuring during the fourth quarter of 2024.
The terms of the RSA "provide for existing equity holders to receive 5% of the common equity of the reorganised company at exit from Chapter 11 proceedings, and warrants to purchase an additional 5% of the reorganised equity, subject to court approval," it said.
Enviva also said it had been in contact with the New York Stock Exchange (NYSE), and anticipated a continued listing of its stock during the restructuring process as long as the company continued to meet the minimum standards set by the Exchange. The company received on 23 January a notification by the NYSE that it was no longer compliant with the listing criteria.
