Enviva to purchase two US wood pellet plants

Enviva has agreed to purchase two US wood pellet facilities in Georgia and South Carolina.

Enviva has agreed to acquire Georgia Biomass Holding, which, through its wholly-owned subsidiary, owns a wood pellet production plant in Waycross, Georgia, from innogy SE and one of its subsidiaries for $175 million (€155 million) in cash, subject to customary adjustments.

The Waycross plant has been operating since 2011 and has a production capacity of around 800 metric tonnes per year (MTPY). As part of the Georgia Biomass acquisition, Enviva will also acquire long-term, take-or-pay off-take contracts with an existing customer for annual deliveries of approximately 500,000 MTPY through to 2024.

The facility also exports wood pellets through a terminal at the Port of Savannah, Georgia, under a long-term lease and associated services agreement. Enviva expects the acquisition of Georgia Biomass to close in the third quarter of this year.

Enviva has also agreed to purchase Enviva Pellets Greenwood Holdings from its sponsor, which, through its wholly-owned subsidiaries, owns a pellet production plant in Greenwood, South Carolina, for $132 million (€117 million) and the assumption of a $40 million (€35.6 million) third-party promissory note bearing interest at 2.5% per year.

The Greenwood facility has been operating since 2016 and its wood pellets are exported through Enviva’s terminal at the Port of Wilmington, North Carolina. Enviva plans to invest $28 million (€24.9 million) to expand the Greenwood plant’s production capacity to 600,000 MTPY by the end of 2021, subject to obtaining the necessary permits.

“The Greenwood and Georgia Biomass acquisitions are fundamentally transformative for Enviva’s scale and diversification,” said John Keppler, chairman and CEO of Enviva. “Not only are we increasing Enviva’s fully contracted production capacity by 35%, but we are doing so in new fibre baskets, with new deep-water terminal infrastructure, and with new customers under new long-term take-or-pay off-take contracts that we expect will enable us to continue our track record of generating durable cash flows and growing our distributions sustainably well into the future.”

Shai Even, chief financial officer at Enviva, commented: “A key pillar of Enviva’s growth is our ability to undertake accretive drop-down acquisitions from our sponsor, which we again demonstrated with the Greenwood transaction.

“What is particularly exciting is that we also had the opportunity to acquire another large-scale plant and associated export terminal capacity from an independent third-party, in what we view to be a highly accretive transaction. The combination of these fully contracted assets and Enviva’s proven execution strategy received strong capital markets interest.”