Enviva files Chapter 11 bankruptcy, plans to cut debt by $1 billion

By Sarah Lizee

Olympia, Wash., March 13 – Enviva Inc. and some of its subsidiaries filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Virginia on Tuesday, according to a press release.

The company has entered into two restructuring support agreements.

One is with an informal group of holders representing about 72% of its senior secured credit facility, about 95% of its 2026 senior notes, about 78% of bonds related to its Epes, Ala.-based plant currently under construction, and about 45% of bonds related to its greenfield project near Bond, Miss.

The second RSA is with some holders representing more than 92% of other bonds.

The company said the RSAs have broad support across its capital structure and are designed to support an expedited restructuring to reduce the company’s debt by about $1 billion, as well as improve profitability, strengthen liquidity and better position the business for long-term success.

The terms of the RSA with the informal group of creditors provide for existing equity holders to receive 5% of the common equity of the reorganized company at emergence and warrants to purchase an additional 5% of the reorganized equity, both subject to dilution from shares issued in connection with an equity rights offering, equity participation election rights for creditors under the a debtor-in-possession facility, and a management incentive plan.

DIP financing

The company has also secured commitments for $500 million in debtor-in-possession financing and other financing accommodations from the informal creditor group, a portion of which will be allocated by the company to eligible stockholders in line with a syndication process that is subject to court approval.

The DIP facility is expected to provide sufficient liquidity to support continued operations across Enviva’s business throughout the restructuring process, as well as help fund the completion of the Epes plant.

Other details

The company said it is filing with the court several customary first-day motions, which 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 company hopes to complete the process during the fourth quarter of 2024. In the meantime, 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 the Bond project. The company intends to revisit restarting the project, depending on the level of customer contracting, once it emerges from the proceedings.

Enviva has been in contact with the New York Stock Exchange and anticipates the continued listing of its common stock there throughout the restructuring process, so long as it continues to meet the minimum continued listing standards.

In its petition, the company listed $2.89 billion in assets and $2.63 billion in debt.

The largest unsecured claims are from note trustee Wilmington Trust, NA, based in Richmond, Va., with a $780.88 million 2026 senior note claim; RWE Supply & Trading GmbH, based in Essen, Germany, with a $348.65 million contract claim; the Industrial Development Authority of Sumter County, based in Lexington, Ala., and Wilmington Trust, with a shred $252 million Epes tax-exempt green bond claim; Mississippi Business Finance Corp., based in Jackson, Miss., and Wilmington Trust, with a shared $101.03 million Bond tax-exempt green bond claim; and Volta LLC, based in Houston, with a $4.14 million trade payable claim.

Vinson & Elkins LLP is serving as legal counsel, Lazard is serving as investment banker and Alvarez & Marsal is serving as financial adviser to Enviva.

Davis Polk & Wardwell LLP is serving as legal adviser and Evercore Group LLC is serving as financial adviser to the informal creditor group.

Enviva is a wood pellet producer based in Bethesda, Md. The Chapter 11 case number is 24-10453.

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