Enviva, the largest US wood pellet exporter, is on the brink of filing for bankruptcy following substantial losses resulting from an ill-fated speculation on future commodity prices. Source: Benzinga
The company is facing nine-figure losses and initiated a 30-day grace period after missing a US$24 million interest payment to bondholders.
Enviva, anticipating a bankruptcy filing by the end of the week, might delay if bondholders agree to extend the grace period.
A faction of Enviva’s bondholders is proposing financing for the Chapter 11 process, offering a potential lifeline, the Wall Street Journal noted.
Enviva’s shares, once resilient during the pandemic and the European energy crisis, have plummeted by 99% over the past 12 months.
Establishing its manufacturing and export network in 2010 with financial support from energy-focused private-equity firm Riverstone, Enviva has grown to be the nation’s leading wood pellet seller. Riverstone holds over 40% of the company’s stake.
In a stark reversal of fortune, last year, Enviva’s strategy to purchase pellets for resale backfired, leaving the company obligated to pay US$296.3 million for 800,000 metric tons of wood pellets worth only US$156.9 million on the open market, according to a November securities filing.
Anticipating an additional US$140 million in losses over the next two years, the company expressed doubts about its ability to persist as a going concern due to the adverse impact on profitability and liquidity.
Enviva, which markets its wood pellets as a low-carbon alternative to fossil fuels, operates ten plants across the South and six marine terminals.
Although metric tons sold increased in the latest quarter, which ended September 30, revenue dwindled, and net losses expanded due to lower prices.
In January, Enviva received notification that the company no longer complies with NYSE’s continued listing criteria.
