Enviva announces drop-drown transactions

Enviva Partners LP announced on June 3 drop-down transactions to acquire the Lucedale, Mississippi, pellet plant, the deep-water marine terminal in Pascagoula, Mississippi, and three long-term, take-or-pay off-take contracts from its sponsor, Enviva Holdings LP.

The Lucedale plant is currently under construction and will have a nameplate production capacity of 750,000 metric tons per year. Enviva Partners has agreed to purchase the plant from its sponsor, Enviva Holdings, for cash consideration of $156 million, subject to customary adjustments and closing conditions. Enviva Partners plans to invest an additional $59 million in the plant to complete construction. The facility is currently scheduled to begin operations in the third quarter of this year.

Enviva said the acquisition of the Lucedale plant also includes an embedded, fully permitted option to expand the plant by 300,000 metric tons per year. That expansion is estimated to cost approximately $60 million.

The Pascagoula terminal is also under construction. Enviva Partners is acquiring the terminal for $104 million, subject to customary adjustments and closing conditions, and expects to invest an additional $26 million to complete construction of the project. The terminal is expected to be operational in the third quarter of this year and will have throughput capacity of 3 million metric tons annually.

As part of the acquisition, Enviva Partners said its sponsor has also agreed to assign the partnership three long-term, take-or-pay off-take contracts with Japanese counterparties. The contracts represent aggregate annual deliveries of 630,000 metric tons per year and include a 15-year contract with Mitsubishi Corp. for 450,000 metric tons per year beginning in 2022; a 10-year contact with a Japanese utility for 120,000 metric tons per year beginning in 2024; and a 21-year contract to supply a new power plant with 60,000 metric tons per year beginning in 2024.

A full copy of Enviva’s announcement, which also includes updated financial guidance for 2021 and 2022, is available on the company’s website.