Anaergia’s Rialto Bioenergy subsidiary initiates restructuring proceedings
RBF, which is 51% owned by Anaergia's wholly owned subsidiary Anaergia Services, anticipates that, during the restructuring proceeding, it will continue to operate its multi-feedstock bioenergy facility in Rialto, California.
The voluntary action by RBF was taken after much discussion and review of alternatives, according to Anaergia, who said it supports this decision as a "necessary step" to protest its long-term interests in RBF.
"As a result of a lack of feedstock available to the facility, RBF has been unable to produce sufficient revenue to cover its costs and debt service," said Anaergia in a statement. "The feedstock shortfall is due to a delay in the implementation and enforcement of laws requiring organic waste diversion from landfills by the City of Los Angeles (the “City”) as required under the City’s contracts with private waste management companies as well under California State law SB1383.
"The City is operating under a corrective action plan stemming from its delayed efforts to adopt and enforce the law’s waste diversion requirements. State law SB1383’s implementation was previously delayed because of the effects of the pandemic. The City only adopted an implementation ordinance in late 2022, which is fully enforceable in January 2024."
Anaergia went on to say that, with future adequate feedstock for the RBG facility - enabled by additional time and relief from debt service, and other payments provided under a Chapter 11 restructuring to allow ramp up - the asset will retain long-term value for its stakeholders.
“After careful evaluation by the managers of RBF, with due consideration of a range of alternatives, the RBF board believes that the Chapter 11 process is in the best interests of RBF and its stakeholders. Debt restructuring will allow RBF to address its liquidity challenges, preserve its ability to ramp up operations as the availability of feedstock is expected to increase in tandem with enforcement by the City of Los Angeles of subscription to organic waste collection and landfill diversion requirements mandated by ordinance and State law,” said Yaniv Scherson, RBF board member and vice president of RBF and CEO of Anaergia. “RBF is strongly supported by the State of California and is critical to the success of SB 1383. We are confident that these actions will help protect the value of RBF and allow it to emerge as a stronger company.”